How the husks of old power plants can help the climate fight

 

By Nathaniel Bullard/Jan 2023

It is now five months since the US Inflation Reduction Act created hundreds of billions of dollars in support for decarbonization technologies. In that time I have had many discussions with entrepreneurs, investors, financiers and energy developers about it. All, needless to say, are excited. That excitement can be a bit breathless at times.  But when the principals of deep decarbonization catch their breath, there is something else they mention. It is weariness, crossed with wariness. Their concern: What if deploying everything the IRA promises isn’t possible through technology, or money, or willpower? What if, instead, it comes up against a massively distributed blocking mechanism — a collective inability to navigate new assets through sclerotic planning and permission schedules?  I hope this is not the path. But if it is, many carbon-cutting efforts will go unrealized because we quite literally could not plan for them. It would be unfortunate to pin fundamental climate progress not on lack of technology, or capital, or positive interest, but rather on languor at best and opposition at worse.  All of these weary and wary conversations have me thinking, though. There is also a way to plan around a collective inability to plan, so to speak, and it runs through the very large body of existing energy assets in the US.  Orsted is the world’s largest developer of offshore wind farms, which it helped pioneer from a niche technology into one of the fastest-growing forms of renewable energy. But it wasn’t always so: Until 2017, the company was known as Danish Oil and Natural Gas. On this week’s Zero, Orsted CEO Mads Nippers explains what compelled a fossil-fuel giant to become a master of wind power (spoiler: It wasn’t climate change).Listen to the episode — and subscribe now on Apple, Spotify, or Google to get new episodes every Thursday. After a coal power plant is retired, the site goes through a long and complex process that includes decommissioning, remediation and redevelopment. Those are unequivocally good steps. And in a planning-constrained future, perhaps coal plants — as well as gas plants down the line, and older renewables too — could be turned into an opportunity and not just a cost.  A good example of this approach is a Google data center built on the grounds of the former Widows Creek coal power plant in Alabama. The company’s description of its rationale is instructive:  Data centers need a lot of infrastructure to run 24/7, and there’s a lot of potential in redeveloping large industrial sites like former coal power plants. Decades of investment shouldn’t go to waste just because a site has closed; we can repurpose existing electric and other infrastructure to make sure our data centers are reliably serving our users around the world. Similarly, for its advanced nuclear project in Wyoming, TerraPower plans to utilize a retiring coal plant. The company’s reasons for choosing the site included “community support, the physical characteristics of the site, the ability of the site to obtain a license from the Nuclear Regulatory Commission (NRC), access to existing infrastructure, and the needs of the grid.” And in New Jersey, Starwood Energy Group recently demolished a defunct coal plant in preparation for installing batteries on the site.  From 2010 to 2019, more than 500 coal-fired power plants were retired in the US. Many of those plants were very old (in 2011, the average plant being retired was commissioned in the 1950s) and very small, with capacity of less than 100 megawatts. But retiring plants have recently tended to be younger and larger — meaning they have upgraded transmission infrastructure and larger physical footprints, and are located farther away from urban areas.  Obviously, not every big project needed for the energy transition will fit into the footprint of a decommissioned fossil-fuel plant. But many will — reactors, factories, logistics centers and anything that consumes significant power rather than generates it. And ideally, reusing yesterday’s infrastructure for tomorrow’s purposes will work in tandem with vastly increased planning and permission for everything else. It will be a bonus, not the bulk, of building.  The opportunity reminds me of the Classical thought experiment known as the Ship of Theseus, which asks whether or not a ship that has had all of its components replaced over many years is still the same ship in essence. If a coal plant dies, does it live on and is it still an asset? I would hope so. And I hope that many other people engage in this thought experiment too, and create climate-positive outcomes in the process. Read more from Green about decommissioned fossil-fuel infrastructure:  Demolishing Coal Power to Build Big Grid Batteries How an Offshore Oil Rig Becomes an Artificial Reef Nat Bullard is a senior contributor to BloombergNEF and Bloomberg Green. He is a venture partner at Voyager, an early-stage climate technology investor. Like getting the Green Daily? Subscribe to Bloomberg.com for unlimited access to breaking news on climate and energy, data-driven reporting and graphics and Bloomberg Green magazine. To read this story on the web, click here.

Coal comeback?  8 billion tons That's how much coal the world is expected to consume each year through at least 2024 -- and it's an all-time record as the energy crunch fuels demand.

Decommissioned  “There is a definite accelerating trend toward decarbonization. In our opinion, it’s irreversible. Folks just have to get on the train.”  Himanshu Saxena Chief Executive Officer of Starwood Energy Group Speaking about the demolition of the 28-year-old Logan power plant in New Jersey to make way for a zero-carbon facility.

Green with envy

Brussels is coming under pressure from European business to respond to the US’s multi-billion dollar clean energy subsidy plan or risk losing investment and falling behind in the green energy revolution. The region’s reaction to the Inflation Reduction Act has become the key issue in meetings between industry leaders and politicians at the World Economic Forum’s annual gathering in Davos this week. It includes billions in financial aid that Europe fears will unfairly benefit US businesses. Ursula von der Leyen, president of the European Commission. Photographer: Stefan Wermuth/Bloomberg To meet global warming goals, we need to scale up technologies that suck carbon dioxide out of the atmosphere.    Denmark’s Orsted, a major developer of renewables,  worries the energy transition could slow down as competition and costs squeeze returns. Dutch startup Zenon Energy is bucking the obsession with smaller batteries to build heavier cells great for industrial storage if not cars. Beyond Meat and Impossible Foods wanted to upend the world’s $1 trillion meat industry. But plant-based meat is turning out to be a fad.

 The wikipedia entry on SK and it looks as if it may require some updating taking in consideration of the two previous post. He has also written something on climate change an economics which is worth consideration. RS.

Steve Keen

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For the Scottish football manager and former player, see Steve Kean.

Steve Keen
Keen in 2013
Born	28 March 1953 (age 69) Sydney, New South Wales, Australia
Nationality	Australian
School or tradition	Post-Keynesian economics, Ecological economics
Influences	Keynes Minsky Fisher Marx Moore Sraffa Graziani Veblen Schumpeter Quesnay R. M. Goodwin Georgescu-Roegen
Contributions	Mathematical models of financial crises and debt-deflation
Information at IDEAS / RePEc

Steve Keen (born 28 March 1953) is an Australian economist and author. He considers himself a post-Keynesian, criticising neoclassical economics as inconsistent, unscientific and empirically unsupported. The major influences on Keen's thinking about economics include John Maynard Keynes, Karl Marx, Hyman Minsky, Piero Sraffa, Augusto Graziani, Joseph Alois Schumpeter, Thorstein Veblen, and François Quesnay. Hyman Minsky's financial instability hypothesis forms the main basis of his major contribution to economics^[1] which mainly concentrates on mathematical modelling and simulation of financial instability. He is a notable critic of the Australian property bubble, as he sees it.

Keen was formerly an associate professor of economics at University of Western Sydney, until he applied for voluntary redundancy in 2013, due to the closure of the economics program at the university.^[2] In autumn 2014, he became a professor and Head of the School of Economics, History and Politics at Kingston University in London. He was also a fellow at the Centre for Policy Development.^{[citation needed]} He has since taken retirement and is crowd source funded to undertake independent research as well as being a Distinguished Research Fellow at the Institute for Strategy Resilience & Security, University College London.^[3]

Contents

• 1Early life and education
• 2Economics
  • 2.1Financial instability and debt deflation
  • 2.2Debunking Economics
  • 2.3Critique of neoclassical theory of the firm
  • 2.4Politics
  • 2.5Views on the UK's EU referendum
• 3Minsky software project
• 4Criticism
• 5Other publications
• 6See also
• 7References
• 8External links

Early life and education[edit]

Keen was born in Sydney in 1953. His father was a bank manager. Keen graduated with a Bachelor of Arts in 1974 and a Bachelor of Laws in 1976, both from the University of Sydney. He then completed a Diploma of Education at the Sydney Teachers College in 1977.

In 1990, he completed a Master of Commerce in economics and economic history at the University of New South Wales. He completed his PhD in economics at the University of New South Wales in 1997.^[4]

Economics[edit]

Financial instability and debt deflation[edit]

Most of Steve Keen's recent work focuses on modeling Hyman Minsky's financial instability hypothesis and Irving Fisher's debt deflation.^[5][6] The hypothesis predicts an overly large private debt to GDP ratio, can cause deflation and depression. Here, the falling of the price level results in a continually rising real quantity of outstanding debt. Moreover, the continued deleveraging of outstanding debts increases the rate of deflation. Thus, debt and deflation act on and react to one another, resulting in a debt-deflation spiral. The outcome is a depression. Steve Keen argues the current global economic crisis^{[disambiguation needed]} is the result of too much private debt.^{[citation needed]}

Debunking Economics[edit]

Keen's full-range critique of neoclassical economics is contained in his book Debunking Economics.^[7] Keen presents a wide variety of critiques on neoclassical economic theory. He argues they show neoclassical assumptions which are fundamentally flawed. Keen claims several neoclassical assumptions are empirically unsupported (that is, they are unsupported by observable and repeatable phenomena) nor are they desirable for society at large (that is, they do not necessarily produce either efficiency or equity for the majority). He argues economists' overall conclusions are very sensitive to small changes in these assumptions.

Keen has attempted to counter Karl Marx's theory (in his view Marx's pre-1857 view, specifically) from a post-Keynesian perspective, by arguing machines can add more product-value over their operational lifetime than the total value of depreciation charged "during those asset lives".

For example, the total value of sausages produced by a sausage machine over its useful life might be greater than the value of the machine. Depreciation, he implies, was the weak point in Marx's social accounting system all along. Keen argues all factors of production can add new value to outputs. However he gives credit to Marx for contributing to the "financial instability hypothesis" of Hyman Minsky.^{[8][full citation needed]}

Keen's book closes with a survey of various schools of heterodox economics, concluding "None of these is at present strong enough or complete enough to declare itself a contender for the title of 'the' economic theory of the 21st century." However, he argues neoclassical economics is a degenerative research program, not generating new knowledge. It primarily grows a belt of protective auxiliary hypotheses to shield its core beliefs from critique. There is an accompanying website which provides more detailed mathematical expositions.

This section needs expansion. You can help by adding to it. (June 2015)

Critique of neoclassical theory of the firm[edit]

Keen has challenged the core, elementary textbook neoclassical theories of Perfect competition and Monopoly, and in particular the argument that firms in "perfect competition" and monopolies are usefully thought of as representing polar opposites. Keen has referred to this as "the theory of the firm." Neoclassical textbooks define a firm acting without any strategic awareness of the effect of its output choice on price as representing "perfect competition" and argue that this condition of "perfect competition" can be represented analytically by a horizontal demand curve facing the firm -- the firm acts as if it believes it can sell whatever it produces at the currently prevailing price, but nothing at any higher price; marginal costs for this firm, it is presumed, are rising and the firm does not want to sell more at the current price or a lower price. Something like such a state of affairs, it is sometimes argued, is approached as the number of firms competing in a market approaches infinity and the effect of any one firm's output decision on the overall market price becomes infinitesimal and can be practically disregarded by the individual firm in its decision-making. By contrast a firm with strategic awareness that its output decision markedly affects the market price, faces, presumptively, a downward-sloping demand curve: expanding the rate of output sold depresses market price. In general, elementary neoclassical textbook presentations hold that all "profit-maximizing" firms will set marginal revenue equal to marginal cost. For the firm in "perfect competition", this means price = marginal revenue = marginal cost = average (unit) cost and no profit. For the "monopoly" firm aware that its output choice affects price, the "profit-maximizing" choice is to choose a rate of output where marginal cost = marginal revenue, but in the monopolist's case, that will mean constraining output to raise price above marginal cost.

Keen challenges the theory and pedagogy of the polar opposition of "perfect competition" and "monopoly" from multiple angles, arguing that the traditional theoretical pedagogy is contradictory and incoherent taken as a whole. He shows that the number of firms in a market is practically irrelevant to whether the firm's output choice affects the overall market price in the simplified (and practically unlikely) case of uniform firm cost structures and a downward-sloping market demand curve. He goes on to explore various scenarios by which multiple firms might arrive at an "equilibrium" market price and level of output. Keen further notes that cost structures are rarely uniform and that in the presence of significant economies from scale of production, a so-called "monopoly" realizing such economies of scale would be led to higher output and lower price than a large number of competing firms unable to realize such economies of scale. Keen also takes note of empirical evidence that many actual business firms are producing in a range of output where marginal cost may be less than average cost and falling, and firms openly desire to produce and sell more at current prices.^[9]

Keen's article on "profit maximisation, industry structure, and competition"^[10] has had counter-arguments by Paul Anglin.^[11] Chris Auld has additionally claimed to show that Keen & Standish's arguments are inconsistent with standard assumptions used in perfect competition, and their analysis uses calculus improperly.^[12]

Politics[edit]

In August 2015, Keen endorsed Jeremy Corbyn's campaign in the Labour Party leadership election.^[13] As of October 2021, Keen plans to run as a senate candidate in the 2022 Australian federal election for The New Liberals in New South Wales.^[14][15]

Views on the UK's EU referendum[edit]

Keen was in favour of the UK leaving the European Union, stating mainstream economists were over-certain and exaggerating the likely effects following the country's withdrawal. Keen regards the open-borders free-movement policy of the EU as precipitate and unsustainable in the absence of a common fiscal policy; all the more so, given how migrants impose burdens on public services in destination countries also experiencing austerity.

He also states the Euro is destined to fail, not least because of the way it penalises recession-hit countries unable to pursue expansive fiscal policy, and indeed considers the whole EU project as a failed one destined for^[16] collapse.^[17]

Minsky software project[edit]

Recently, Keen commissioned the development of a software package called Minsky^[18] for visually modelling national economies, in a way that is intended to be more accurate than mainstream macroeconomic models – which he contends do not properly include debt and banking. He envisages it being used for both educational and research purposes.

The first phase of the development was funded by an academic research grant, as is typical for academic research projects – but in February 2013 Keen launched a crowdfunding project on Kickstarter to allow members of the public to contribute towards taking MINSKY to the next level of development.^[19] In the first 24 hours, this project raised approximately 15% of its funding target, and has since fully achieved its initial funding goal of $50,000.00.

Criticism[edit]

Matthijs Krul^[20] maintains that Keen, while broadly accurate in his criticism of the neoclassical synthesis, generally misrepresents Marx's views in Debunking Economics and in earlier work when asserting that, in the production of commodities, machinery produces more value than it costs.^[21]

Austrian School economists Robert P. Murphy and Gene Callahan claim Keen's 2001 book "suffers from many of the very faults of which he accuses the mainstream". They also claim that much of his work is "ideologically motivated even while criticising neoclassical economics for being ideological". They praise his critique of perfect competition and his chapter on dynamic vs. static models, whilst they criticise his attempts at objective value theory and what they claim is his misrepresentation of the Austrian School interpretation of Say's law.^[22]

Other publications[edit]

• Keen, Steve (2021). The New Economics. A manifesto. Polity. ISBN 9781509545292.
• Keen, Steve (2017). Can We Avoid Another Financial Crisis? Polity. ISBN 9781509513734.
• Keen, Steve (2015). Developing an economics for the post-crisis world. World Economics Association and College Publications. ISBN 9781848901865.
• Lee, Frederic S. and Steve Keen (2004): "The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory", Review of Social Economy, V. 62, Iss. 2: 169–199
• Co-editor of: Commerce, Complexity and Evolution: Topics in Economics, Finance, Marketing, and Management: Proceedings of the Twelfth International Symposium in Economic Theory and Econometrics. New York: Cambridge University Press. ISBN 0-521-62030-9.
• The Debunking Economics Podcast: with Phil Dobbie and Prof. Steve Keen (http://debunkingeconomics.com)

See also[edit]

• Paul Ormerod
• Hyman Minsky

References[edit]

1. ^ Keen, Steve The Debtwatch Manifesto 2012 http://www.debtdeflation.com/blogs/manifesto/
2. ^ "Debtwatch economist Steve Keen takes UWS to Fair Work Commission, but uni gets ready to fire back". 20 January 2013.
3. ^ ISRS, UCL staff
4. ^ Economic growth and financial instability
5. ^ The Roving Cavaliers of Credit
6. ^ Steve Keen (1995): "Finance and economic breakdown: modelling Minsky’s Financial Instability Hypothesis", Journal of Post Keynesian Economics, Vol. 17, No. 4, 607–635
7. ^ Debunking Economics: The Naked Emperor of the Social Sciences (2001, Pluto Press Australia) ISBN 1-86403-070-4
8. ^ Keen, Steve The Debtwatch Manifesto 2012 http://www.debtdeflation.com/blogs/manifesto/
9. ^ Keen, Steve; Standish, Russell (26 June 2010). "Debunking the theory of the firm—a chronology" (PDF). Real-World Economics Review (53): 56–94.
10. ^ Steve Keen & Russel Standish (2006):"Profit Maximization, Industry Structure, and Competition: A critique of neoclassical theory" Archived 2 November 2006 at the Wayback Machine, Physica A 370: 81–85
11. ^ Paul Anglin (2008): On the proper behavior of atoms: A comment on a critique Physica A 387: 277–280
12. ^ Chris Auld (2012): Steve Keen still butchering basic microeconomics
13. ^ "The Labour party stands at a crossroads". The Guardian. 14 August 2015. Retrieved 15 July 2017.
14. ^ van Onselen, Leith (24 September 2021). "Steve Keen announces Senate run". MacroBusiness. Retrieved 16 October2021.
15. ^ How bad is the political situation in Australia right now?, archived from the original on 12 December 2021, retrieved 16 October 2021
16. ^ Unia to tonący statek/Rzeczpospolita/2016/09/29^{[failed verification]}
17. ^ "What Next After Brexit?". Forbes.
18. ^ "Minsky". IDEA Economics: Institute for Dynamic Economic Analysis. Retrieved 21 November 2019.
19. ^ Steve Keen (2013). "Kickstarter project". Retrieved 10 February 2013.
20. ^ Steve Keen’s Critique of Marx’s Theory of Value: A Rejoinder
21. ^ Keen, S., "Use-value, Exchange-value, and the Demise of Marx's Labor Theory of Value", Journal of the History of Economic Theory, 15 (Spring 1993).
22. ^ Review of Austrian Economics 2003 – http://www.gmu.edu/depts/rae/archives/VOL16_4_2003/6_BR_Murphy.pdf

External links[edit]

Wikimedia Commons has media related to Steve Keen.

Wikiquote has quotations related to Steve Keen.

• Steve Keen's Patreon posts
• Steve Keen's Debtwatch blog
• Steve Keen on Twitter
• Steve Keen at the Institute for New Economic Thinking