Hypothetical - Energy crisis (in reverse)

[Denny Crane!]

So I've been following a recent controversial probable con at http://ecatnews.com/ about a man called Andreas Rossi and now a company he had been working with dekfalion who claim to be offering open and rigorous tests of a low energy nuclear reactor in competition. Such energy would be cheap, plentiful and relatively easy to roll out.

Now my hypothetical is if within a decade somewhere like the UK could install £20bn worth of these reactors and replace our reliance on fossil fuels in a relatively short time period, as horribly simplistic as that sounds.

The UK gov. raises 22 billion a year from fuel duty alone not including the VAT paid on petrol, taxation of north sea oil, taxation of the energy used in industrial processes and the resulting VAT charges and probably more that I have forgotten. Potentially it could wipe off up to £30 billion a year in government revenues which is a another 25% in structural deficit as well as causing a massive deflationary trend.

Could cheap energy cause an economic crash albeit perhaps only temporary until the effects of cheaper energy revitalise the economy?

[Inconsistent]

Economics definitely is not my strong suit, but couldn't the government force the companies to start out with obscenely high prices that are also taxed rather heavily, then gradually bring prices down?

[SLN445]

Also an increase in retail spending and such with the extra money in peoples pockets if energy prices drop.

[Big War Bird]

In a word, no. You're current tax structure could easily be adapted to the new energy source. You pay so much tax per kilowatt now, pay the same tax per kilowatt in the future.. Oil, gas, coal or cold fusion, ultimately the tax is levied on the output and funded by the consumer, not on production costs.

[Poach]

As BWB said, taxes come from people paying per unit of energy, not from people paying for the type they use. The issue, as you've hinted at, is the fact that each unit of energy becomes cheaper to produce and therefore cheaper to purchase. As total energy use will not go up by much (some people might use heaters rather than jumpers in winter, for example) total company earnings will experience a drop.

What you must remember, however, is that companies charge the customers to make a profit. Total costs for the energy company to produce energy will drop, but not staff wages, not maintenance costs, transport costs, etc. As such, the actual reduction in revenue experienced by companies as a result of reduction in production costs might not be the plunge you're predicting.

At the end of the day, most of what we pay for petrol is tax: some 80p of the 115-120p we pay at the pump goes to the Treasury. If the UK Government is to face a serious shortfall they could simply tax energy more to keep costs up.

I do not, however, think they will see a shortfall: the money people spend on energy won't simply vanish, they'll spend it on other things, which will increase the revenues of other sectors, which will then find its way into Government coffers from there. I don't have any maths available to me to work it out, but:

Con:
Energy revenues will go down somewhat (off the top of my head I don't think the actual production of energy is all that high as it stands anyway, depending on the source of course).

Pro:
Revenues from other sectors will go up as people spend their new disposable income elsewhere and companies find their own expenditures reducing.
New companies may start up due to the reduced operating costs.
Government costs on their own energy bills will reduce.
Government can tweak taxes.


To answer your specific question: it may cause a short-term shock as people and society adapt if we install all this capacity over an extremely short time period, but that is not likely: the transition period will be fairly long.

[Vizsla]

On an international scale total tax paid as a percentage of individual income is fairly high in the UK. Exact percentages vary; I’ve seen different numbers bandied around depending on how people count indirect taxation.
The point is we could switch to tax levels closer to American or Japanese levels without the roof falling in. Neither of those countries is noticeably poverty stricken.

[Condottiere 40K]

Assuming no other environmental costs are involved, re-industrialize encouraging high energy using industries to set up shop in your country, emphasizing advantages in infrastructure, highly educated workforce and proximity to markets, since presumably this type of energy plant could be used in transport, making that cost negligible as well.

[Tiwaz]

In the end, change in terms of petrol income would not be that different.

Cheap electricity does not instantly mean that everyone wants to switch to electric car. Challenges in terms of range and recharge keep those things from reaching large scale use as long as people want to be able to travel further away or use their car for long time.

For example taxi might benefit from the electric car, if they did not drive much during day forcing them to return for recharge. Which in turn still takes very long time, during which you are not making money.

This compared to 5 minute stop for filling the tank and going back to earn money.

[removeduser_4536284751384]

Cheap electricity does not instantly mean that everyone wants to switch to electric car.

But it does mean petrol can be cheaply synthesized in the UK rather than importated.

[Tiwaz]

But it does mean petrol can be cheaply synthesized in the UK rather than importated.

Care to show technology offering this possibility? If it was that simple, Iceland would be oil producer today with their energy potential.

The future is now it seems.
A Renault with an interchangeable battery exists, changing it at the quickdrop station takes about 5 min., and quick-charge stations that use higher voltage can charge to 30 miles range/10 min. It is only the home-charger models that takes 8 hours to charge, and do you have a petrol station at home?
At least their own website says so: http://www.renault-ze.com/en-gb/elec...z.e.-1964.html
I can't really afford one of those yet, they are about 200,000 danish crowns (divide by roughly 10 to get £), but I think I will book a testdrive sometime in january just as well and tell you about it. I have no clue when they will be available where you live.

Changing battery requires large amount of rare metals to produce excess batteries by dozens.

And high voltage recharge stations mean electric net has to be improved to handle increased burden or you get blackouts when safeties trigger when transfers exceed tolerances of the grid.

[Logios]

Care to show technology offering this possibility? If it was that simple, Iceland would be oil producer today with their energy potential.



Changing battery requires large amount of rare metals to produce excess batteries by dozens.

And high voltage recharge stations mean electric net has to be improved to handle increased burden or you get blackouts when safeties trigger when transfers exceed tolerances of the grid.

10 mins of Googling, and see what I found:
Rare earth metals can be recycled:
http://www.recyclinginternational.co...able-batteries
New mining opportunities for rare earth metal (and other) mining in Greenland. Global warming must have made this possible:
http://my.opera.com/nielsol/blog/201...nite-greenland
http://www.theaustralian.com.au/busi...-1225782794299
Intelligent distribution systems for electricity are already being implemented, and a great deal of r/d is taking place in this field. This was mainly done to avoid wasting power when demand is low, but will of course increase roboustness and capacity of the grid.
http://en.wikipedia.org/wiki/Smart_grid

If you build it, they will tax it.

Indeed they will, in the words of some great poets:

[removeduser_4536284751384]

Care to show technology offering this possibility? If it was that simple, Iceland would be oil producer today with their energy potential.

The technology doesn't exist to convert some cheap and readily available raw material into useful hydrocarbons yet. Well, it does - wood, atmospheric carbon dioxide, and other things can all be converted into hydrocarbons - but it's too expensive.

Someone will invent it. I aspire to be that someone.

Well, they have to increase output, because demand is going sky high. This does not change fact that if ever such car scheme where you replace batteries is going to make demand go absolutely insane.

Recycling does not answer situation where you need millions, billions even, batteries in use at same time. And demand is going to require much more mining operations.

Make the required elements in nuclear reactors.

[Denny Crane!]

At the moment I think the range is still like 100 miles after a very lengthy charge so I can't imagine taxi drivers going for that. If that future tech came about which offered instant recharges then fair enough but as you say, totally unviable as I think it is still something like an 8 hour charge? Insane. I love the idea of electric cars in theory but in practice they aren't up to much.

[Logios]

At the moment I think the range is still like 100 miles after a very lengthy charge so I can't imagine taxi drivers going for that. If that future tech came about which offered instant recharges then fair enough but as you say, totally unviable as I think it is still something like an 8 hour charge? Insane. I love the idea of electric cars in theory but in practice they aren't up to much.

The future is now it seems.
A Renault with an interchangeable battery exists, changing it at the quickdrop station takes about 5 min., and quick-charge stations that use higher voltage can charge to 30 miles range/10 min. It is only the home-charger models that takes 8 hours to charge, and do you have a petrol station at home?
At least their own website says so: http://www.renault-ze.com/en-gb/elec...z.e.-1964.html
I can't really afford one of those yet, they are about 200,000 danish crowns (divide by roughly 10 to get £), but I think I will book a testdrive sometime in january just as well and tell you about it. I have no clue when they will be available where you live.

[Menelik_I]

Now my hypothetical is if within a decade somewhere like the UK could install £20bn worth of these reactors and replace our reliance on fossil fuels in a relatively short time period, as horribly simplistic as that sounds.

The UK gov. raises 22 billion a year from fuel duty alone not including the VAT paid on petrol, taxation of north sea oil, taxation of the energy used in industrial processes and the resulting VAT charges and probably more that I have forgotten. Potentially it could wipe off up to £30 billion a year in government revenues which is a another 25% in structural deficit as well as causing a massive deflationary trend.

Could cheap energy cause an economic crash albeit perhaps only temporary until the effects of cheaper energy revitalise the economy?

Then they will Tax the Cheap Reactors /thread.

[Phier]

If you build it, they will tax it.

[Town Watch]

Isn't it sort of obvious guys, rare earth metals, rare earth magnets etc... Aren't they supposed to be, well, rare? At least in the sense that you would literally have to transform all cars to use batteries of such substances. That's a whopping level of demand right there.

There was an interesting piece of news some time ago, about China producing most of the market's rare earth elements. This is a strategic concern in the highest sense because missile technology relies heavily on rare earths.

[Logios]

Isn't it sort of obvious guys, rare earth metals, rare earth magnets etc... Aren't they supposed to be, well, rare? At least in the sense that you would literally have to transform all cars to use batteries of such substances. That's a whopping level of demand right there.

There was an interesting piece of news some time ago, about China producing most of the market's rare earth elements. This is a strategic concern in the highest sense because missile technology relies heavily on rare earths.

Try reading the links I put up Town watch..., the term rare earths is a bit misleading, lanthanides can be found in many places, but extracting from to low concentrations is usually not economically feasible. China has a defacto monopoly at the moment because they have chosen to develop their mining industry at their good rare earth deposit sites, but these sites are found in many other places of the world (Greenland, Mojave Desert, Bottom of the Pacific and probably many more).
Virtually hundreds of battery designs exists and no single strategic resource will control them all, the design that becomes prevalent could be the product of the supply situation.

Which requires large investments, which costs money. Which has to come from somewhere. Also takes time.

This can be said about all infrastructure, let us not sit down and cross our arms and refuse to develop our society. Technology needs to move forward.

[Tiwaz]

This can be said about all infrastructure, let us not sit down and cross our arms and refuse to develop our society. Technology needs to move forward.

Yes, but usually infrastructure is rebuilt slowly. Having to rework huge amount if quickly, to enable wide scale transition to use of electric vehicles, is going to be that much harder.

And we still have to pay for it. If power companies have to upgrade the grid and pay lots of cash, power they produce stops being cheap to end customer.

The technology doesn't exist to convert some cheap and readily available raw material into useful hydrocarbons yet. Well, it does - wood, atmospheric carbon dioxide, and other things can all be converted into hydrocarbons - but it's too expensive.

This technology existed already around WW2.

Someone will invent it. I aspire to be that someone.

Good luck. But I do not make my financial plans based on my investment on this weeks lottery.
Someone might invent it, but question is when. We have zero guarantee that it will take place in any near future.

Make the required elements in nuclear reactors.

Mmhmm...

And making lots of that material is how cheap and easy?

Tritium is produced in nuclear reactors. Price on market is about 30k$ per gram.

[removeduser_4536284751384]

And making lots of that material is how cheap and easy?

Tritium is produced in nuclear reactors. Price on market is about 30k$ per gram.

Tritium is in low demand and the cost price is high.

The amount of demand we are discussing in this thread would drastically increase the supply of these metals from reactors. The cost price would also be brought down, and so on.