Some numbers below the fold.

Here's an interesting graph from the Economist:

This comes from an article about the revival of nuclear power (possibly behind a subscription wall), a topic on which the Economist is fairly neutral as France's EDF, one of their favorite targets, is the undisputed leader of the sector.

This graph shows that wind and nuclear have a similar long term cost of production, close to the current cost of hydrocarbon (coal or gas)-fuelled power plants.

But the more interesting thing is that both are set to benefit from this:

From another article in the Economist, which includes this amazing tidbit:

The cost of the allowances to produce one kilowatt-hour of coal-fired power is now greater than the cost of the coal itself, reckons Louis Redshaw of Barclays Capital.

If you look at the first graph, that means that carbon trading, as imposed in Europe, increases the cost of carbon-fuelled power by 30% or so, and makes it more expensive than both wind and nuclear.

Carbon trading is based on the fact that carbon polluters, like power producers and a number of industrial companies, have been allocated quotas of carbon emissions (which go down with time), and they have to purchase such "rights to pollute" (or pay penalties) if they pollute more than their quota. Conversely, they are allowed to sell their quotas if they pollute less. This is meant to reflect the cost to society of their carbon emissions, and it provides a market-based mechanism to encourage them to pollute less. It works on both counts.

My conclusion:

With carbon trading, wind does not need subsidies to be really competitive. It's a totally home-grown power source, it's job- and technology-rich, it creates activity (including tourism) in isolated areas. It's spectacular.

Originally posted to Jerome a Paris on Sun Jul 10, 2005 at 04:30 PM PDT.

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