Matt Ridley's Blog, page 44

Cheap energy or green energy - you cannot have both

My regular Times column from 26th September
2013:

Hypocrisy can be a beautiful thing when done well.
To go, as Ed Miliband has done, within four years, from being the
minister insisting that energy prices must rise — so uncompetitive
green energy producers can be enticed to supply power — to being
the opposition leader calling for energy prices to be frozen is a
breathtaking double axel that would make Torvill and Dean
envious.

Remember this is the very architect of our current energy
policy, the man who steered the suicidally expensive Climate Change
Act through Parliament; the man who even this week pledged to
decarbonise the entire British economy (not just the electricity
sector) by 2030, meaning that nobody will be permitted to heat
their house with gas.

Has he checked the price of electric heating versus gas
recently? The gap is due to grow greater. By 2030 much of the
electricity will, in theory, come from offshore wind, which is
being promised three times the price that gas-fired power stations
get for making electricity. So Mr Miliband is telling us to treble,
and freeze, our heating bills at the same time.

“There is not a low-cost energy future out there,” Mr Miliband
the Energy Secretary said in July 2009, insisting that we learn to
live with higher energy prices. “We can work together on the basis
of this price freeze to make the market work in the future. Or you
can reinforce in the public mind that you are part of the problem
not the solution,” Miliband the Opposition Leader threatened energy
companies yesterday.

In a prescient paragraph entitled “And guess who gets shot?”, a
Liberum Capital report in April suggested that when the
energy-price crisis came, the government of the day would heap most
of the financial pain on to investors by insisting that they cut
profits. That day has arrived early. Mr Miliband has effectively
admitted that he will try to delete investors’ return on equity
rather than take any blame for the huge bills that will drive
people into fuel poverty.

Liberum estimated that to deliver the current Government’s
low-carbon energy policy, which Labour thinks is too wet, would
require £161 billion to be spent by 2020 and up to £376 billion by
2030. That will be passed to consumers. Much of the discussion on
the Energy Bill in the House of Lords this summer was about how to
make sure the subsidies were generous enough to entice such large
investment. Liberum calculated that “if the investment does take
place we see electricity bills rising by at least 30 per cent by
2020 and 100 per cent by 2030 in real terms”.

Mr Miliband may have ensured that it does not take place. There
has never been a price control that did not crimp supply. America’s
controls on natural gas prices, instituted in the 1950s on the
assumption that supplies were limited, and meant to protect
consumers from monopoly pricing, ended up causing shortages and
high prices. Nobody wanted to look for gas if the price was fixed
by the government. After controls ended in 1989, America became
awash with natural gas and prices plummeted.

Imagine you are a big energy company wondering whether to spend
millions pouring cement into the Dogger Bank to bear the weight of
wind turbines. You reckon there’s a 50 per cent chance of a
Miliband government in 2015 when the turbines come on stream. But
you’ve just heard that Prime Minister Miliband will not let you
make a profit. You will scale back your plans now. “If Centrica and
SSE cannot make any money supplying electricity to the retail
market then they won’t supply it. The lights will go off,” said
Neil Woodford, the head of equities at Invesco Perpetual, one of
Centrica’s biggest shareholders. And he has the power to make it
so.

Shed no tears for the energy firms. They went along with the
crony-capitalist plan for driving up costs, mouthing green
platitudes that gave them cover for price rises. Meanwhile, the
rising cost of oil and gas gave the Government the excuse to argue
that they would have risen anyway. They are counting on further
rises to come, but may not be so lucky as the shale revolution
gathers pace.

In a subsidised system, the politician becomes the customer. The
companies thought all they had to do to make profits was to pick up
the phone to the Energy Minister, sigh and tell him that they would
not build a wind farm unless he raised the “strike price”. That’s
how it got to an unbelievable £150 per MWh. As the closure of
Britain’s nuclear and coal plants is ahead of schedule, and the
opening of green and nuclear replacements is about three years
behind, the minister was at their beck and call.

Now suddenly they will be realising that they should have been
listening to their real customers all along and championing cheap
energy. Maybe even ministers will think the same thing. If so,
there is a silver lining. This just might tear up the cosy
consensus on energy policy that has driven the current Energy Bill
through Parliament so far. After all, the public will get the
impression that Mr Miliband is standing up for consumers, albeit
against the wrong enemy. David Cameron needs to outflank him or
risk looking like a friend of crony capitalists.

Around the world, government after government is walking away
from the expensive fiasco that is energy decarbonisation. Stephen
Harper, of Canada, led the way. Tony Abbott, of Australia, is
hurtling down the same path. Spain reneged on its promises to green
investors. Even Angela Merkel, now leading a largely Green-free
parliament, is being told by leading economic adviser that the
gigantic expense of the green “Energiewende” cannot be afforded.
She’s already building new coal-fired power stations. (In passing,
I declare a commercial interest in coal.)

When he came to power, Mr Cameron thought energy policy didn’t
matter much and could be safely contracted out to Lib Dem wishful
thinking to guard his Islington flank. In fact, affordable energy
is crucial to economic recovery. It deserved a Gove or Duncan Smith
to challenge producers and champion consumers. Maybe, by mistake,
Mr Miliband will trigger such a rethink.

Bill Bryson's 1927

My review in The Times of Bill Bryson's fine book, "One
Summer".

The summer of 1927 in the United States seems at first glance an
odd subject for a book. We all know what happened in 1914, or 1929,
but what’s so special about the 86th anniversary of one summer in
one country? You can see the London publishers scratching their
heads when Bill Bryson’s pitch arrived. Who was Jack Dempsey
anyway? Is Babe Ruth a woman or a child? Isn’t Calvin Coolidge a
cartoon character? Did Herbert Hoover invent the vacuum cleaner? Is
Sacco and Vanzetti a department store? Charles Lindbergh: ah, we
know who he is.

Actually, it’s a brilliant idea for a book, because Bryson now
had the excuse to do what he does best: tell little biographies of
historical figures, recount stories, paint word pictures and make
witty asides. The result is a gripping slice of history with all
sorts of reverberant echoes of today.

America in 1927 seemed a very modern, fast-changing place, in
many ways just like now. It had new technology in the shape of
radio, cars and planes. It had a cult of celebrity: Lindbergh drew
gigantic crowds wherever he went after he had crossed the Atlantic
in the May. It had a school massacre in which 42 people, mainly
children, were killed by a madman in Michigan. It had political
scandals: President Warren G. Harding died just before the
gob-smacking extent of his Administration’s financial corruption
and his own sexual appetite emerged.

While having an affair with his wife’s best friend, Harding met
young Nan Britton, a girl 31 years his junior, with whom he started
a relationship as soon as she became an adult, and fathered a
daughter. When his payments to the daughter ceased on his death,
Miss Britton wrote a breathless book about their numerous trysts in
a small closet in an ante-room at the White House, where “in the
darkness of a space not more than five feet square the President of
the United States and his sweetheart made love”. The book sold
50,000 copies in six months in the summer of 1927, although most
papers refused to review it. Dorothy Parker did review it
for The New Yorker , writing: “when Miss Britton gets
around to revealing, Lord, how she does reveal”.

America that year had a passion for sport with Babe Ruth and
Jack Dempsey earning huge sums. It had an obsession with violent
crimes, notably the Dumbbell murder case, in which Ruth Snyder and
her lover killed her husband and covered their tracks most ineptly.
It had a terror of terrorists, as anarchist bombs targeted many
prominent people. It had a failing “war on drugs” — prohibition
fuelling the huge income of Al Capone and his ilk. It even had
extreme weather: the Mississippi floods of that spring were a far
greater natural disaster than any in recent years, although nobody
thought of blaming human beings back then.

These uncanny similarities stand alongside startling
differences. Life seems to have been much more expendable in 1927.
People died in fires, bombs, stadium collapses, aeroplane crashes,
floods, court-ordered eugenic sterilisations and electric chairs
with less of the attendant anguish and inquiry that would happen
today. Also alien is the attitude to race. In the 1920s it was not
just acceptable to be a racist, it was politically correct. Bryson
points out that part of the reason that boxing was considered
unwholesome before 1920 was that it wasn’t racist. It was the only
sport where black people competed on level terms. It became
respectable and popular only when Jess Willard and then Jack
Dempsey made it a white-dominated sport like all others.

There’s an unfamiliar informality about the time, too. When
Lindbergh landed in Paris, the surging crowds not only carried him
on their shoulders, but clambered all over and damaged his plane.
Calvin Coolidge learned of Harding’s death and his own elevation to
the presidency when a messenger came running with a telephone
message from the general store near to where he was staying with
his father in rural Vermont. We think of today as an informal age,
but, apart from styles of dress, this is not really true.

Of all the delightful characters that Bryson gives us in this
book – sexually and financially incontinent Ruth, cold Lindbergh,
ambitious Hoover, obsessive Henry Ford – none is quite as hilarious
as Calvin Coolidge. Most people know that Silent Cal was famously
taciturn and inactive to the point of “calculated indolence”. As
the President he worked four hours a day and napped for much of the
rest.

Coolidge did, however, have a lively if odd sense of humour,
unlike his hyperactive and earnest Commerce Secretary, Herbert
Hoover, whom he disliked. One day Coolidge announced to the press
that Hoover would not be appointed Secretary of State. Since Hoover
had not asked for the job, and nor had the incumbent Frank B.
Kellogg offered to leave it, the announcement baffled the nation.
It appears to have been one of Coolidge’s jokes.

This brings up one of the only things I can find to say in
criticism of this fine book. The characters that Bryson depicts are
so vivid, larger-than-life and eccentric that one begins to wonder
if there were any normal folk in 1927 America. Was everybody a
Hogarthian, Rabelaisian grotesque? Surely not.

Perhaps in his admirable quest to mine biographies for
eccentricities, Bryson ends up being just a little bit unfair. One
has to remind oneself that these people with peculiar foibles
achieved astonishing things. Lindbergh did fly single-handed across
the Atlantic when far more fancied teams died; Babe Ruth did hit
more home runs that summer than ever before or since; Henry Ford
did make cars affordable; and Calvin Coolidge did achieve great
popularity while presiding over a whistle-clean administration
during a prolonged economic boom.

Bryson gives us a taste of the crash to come by describing the
meeting on Long Island that summer of four central bankers. Each
inevitably emerges as a deeply eccentric figure, especially the
neurotic Montagu Norman. It was at this meeting that Benjamin
Strong Jr agreed to cut the Federal Reserve’s discount rate from 4
per cent to 3.5 per cent, which was in effect “the spark that lit
the forest fire”, creating an unsustainable credit bubble the
following year as stock prices doubled and brokers’ loans to
investors quadrupled. Central banking, we are reminded in passing,
is more cause than solution of financial instability.

Bryson, the travel writer turned non-fiction impresario, has now
invented what may be an entirely new genre of non-fiction: the
brief history of an era told through the biography of a summer. It
is a book from which you can read many lessons, or just revel in
the writing.

One Summer: America 1927 by Bill Bryson (Doubleday, 560pp;
£20)

Why are there so few people over 115 years of age? (One)

My Times column on how the world's oldest people
are getting younger:

The two oldest men in the world died recently.
Jiroemon Kimura, a 116-year-old, died in June in Japan after
becoming the oldest man yet recorded. His successor Salustiano
Sanchez, aged 112 and born in Spain, died last week in New York
State. That leaves just two men in the world known to
be over 110, compared with 58 women (19 of whom are Japanese, 20
American). By contrast there are now half a million people over
100, and the number is growing at 7 per cent a year.

For all the continuing improvements in average life expectancy,
the maximum age of human beings seems to be stuck. It’s still very
difficult even for women to get to 110 and the number of people who
reach 115 seems if anything to be falling. According to Professor
Stephen Coles, of the Gerontology Research Group at University of
California, Los Angeles, your probability of dying each year shoots
up to 50 per cent once you reach 110 and 70 per cent at 115.

Female “supercentenarians” — as 110-plus people are called — are
a long way off breaking the record for long life. The record, 122,
was set by Jeanne-Louise Calment in 1997, and the oldest living
person in the world, Misao Okawa, 115 years and 199 days as of
today, would have to live another seven years to overtake that:
meaning Ms Calment’s record will stand for at least 23 years. Ms
Okawa is the only person over 115 alive today, whereas in 1997
there were four.

Japan has more supercentenarians per head of population than
other countries, but not as many as thought a few years ago. After
an investigation in 2010, about 300 very old people, claiming
monthly pensions through their children, were found to be either missing entirely or
dead in their beds for decades. These phantoms included several
over 110.

The lack of any increase in people living past 110 is
surprising. Demographers are so used to rising average longevity
all that they might expect to see more of us pushing the boundaries
of extreme old age as well. Instead there is an enormous increase
in 100-year-olds and not much change in 110-year-olds.

The smidgin of good news for the pension industry, therefore, is
that it seems that human lifespan comes with some sort of a sell-by
date. In this respect we are not like some creatures — tortoises,
sharks, trees — that would apparently go on for ever but for
accidents and illnesses.

Professor Coles has done 11 autopsies on supercentenarians and
finds that most die of congestive heart failure secondary to
“systemic TTR amyloidosis”, a thickening of the blood. The rest
tend to inhale food particles and get pneumonia. It is not really
clear why women live longer than men; probably something to do with
their having a different cocktail of steroid hormones.

Next time you hear some techno-optimist say that the first
person to live to 250, or even 1,000, may already have been born,
remind them of these numbers. The only way to get a person past the
“Calment limit” of (say) 125 will be some sort of genetic
engineering. This might prove to be, if not easy, at least fairly
routine — in technical terms. Fiddling with just a few genes in
worms, fruit flies and mice has enabled scientists to extend their
lifespan, sometimes up to sevenfold. One recent study in Lausanne
found a 50 per cent reduction in the activity of just three genes
on Chromosome 2 increased mouse lifespan by about 250 days, and
kept them healthy longer.

Ethically, however, such a step in human beings is unthinkable,
since it would mean altering the genes of an unborn child without
asking his or her permission. It is hard to imagine any government
allowing such an experiment, with a high probability of unexpected
consequences, let alone anybody finding a team of scientists
prepared to do it. Plus, ethics aside, it is not easy to see where
the demand for such a drastic and expensive step would come from.
Who would actually want their next child to live past 125, let
alone badly enough to go through with it?

All those people who eat wheat germ or special yoghurt or
vitamin supplements in the hope of living for ever are probably
wasting their time. So too are those who practise “caloric
restriction” on the ground that mice live much longer if nearly
starved. Such gaunt folk might get to 100 instead of 90, but they
are not going to get to 120 by such means.

Exercise, too, is nice, but it’s not going to help at extreme
old age. People who walk fast at 75 are more likely to live beyond
85 than those who walk slowly, but cause and effect goes the wrong
way: being likely to live longer makes you a faster walker rather
than vice versa.

It’s still possible there might be a pharmaceutical way of
extending lifespan. The genes that need altering to get flies and
worms to live longer are all part of a nutrient-signalling pathway,
and a drug that affects this pathway has been shown to extend lifespan in flies.
It’s called rapamycin, after Rapa Nui (Easter Island) where it was
first found in soil bacteria. Rapamycin’s molecular targets are
similar in people and flies, so it might work in people too. It is
already used as an anti-cancer agent.

But the latest news is not encouraging, because rapamycin’s
side-effects are unattractive: impaired wound healing, insulin
insensitivity, impaired immunity, cataracts and testicular
degeneration. Dr Linda Partridge, of the Max Planck Institute for
the Biology of Ageing in Cologne, says that separating these
side-effects from the benefits, and working out when people have to
start taking the drug to get any benefit, is the current focus of
work on mice.

In the meantime, those of us who were born before the last
decade of the 20th century can mostly forget about seeing the 22nd
century: there are now just seven people born in the 19th century
known to be still alive. We may live much longer on average than
our grandparents, but there’s not much chance of breaking records.
Just as well when you think about the implications for pensions,
healthcare costs and intergenerational equity.