Philosophic approach to solar panel cost-benefit

I HAVE enlisted the help of Immanuel Kant (1724-1804), John Stuart Mill (1806-1873) and the various economists who crafted cost-benefit analysis to help decide what to do about climate change. I hope that you, too, can do the same thing. Kant took a universalist approach. The test for morally commendable action was: what would happen if everyone did this? Mill’s test was the greatest good for the greatest number — utilitarianism.

Utilitarianism has enormous appeal. We want out political leaders to put ideology and class aside and decide according to “national interest”, “the common good”, “what is best for us all”.

These might be fairly esoteric philosophical theories, but nonetheless, they help answer life’s major questions: how should we behave and how should we be governed?

The value of Mills’s test breaks down if “the greatest number” is read down to mean “the greatest number of Australians”, as this Government has done with climate change. Australia can go on adding ever more carbon to the atmosphere and the great majority of Australians will be better off, provided the rest of the world does the work in reducing carbon .

So to balance that out, individuals should take the Kantian approach and say I will reduce my carbon footprint because if everyone took that approach the world would be a better place.

We might moderate that by a caveat that we should not send our families into poverty, heat stress or health-threatening cold — a “spend your kids’ inheritance now on solar panels” approach.

Enter the economists’ cost benefits analysis.

It seems that earlier action by governments and individuals has had its effect. The seemingly generous subsidies for solar hot water and feed-in tariffs for those who generate electricity from solar panels on their roofs have created greater demand. As a consequence, the price has dropped substantially.

Also, the price of electricity has risen substantially. Only a little of that, of course, is due to the carbon tax, despite the self-serving exaggerations of the Coalition.

We are now on the cusp of solar panels being economic without government subsidy. A lot of solar companies are making clear cases on conservative assessments of electricity generation and use that households installing solar panels will be better off financially.

Moreover, we are seeing a lot of anecdotal evidence of people getting paid from electricity companies rather than paying them.

When systems used to cost $20,000 or $30,000 the interest paid or forgone made panels uneconomic without big subsidies.

Now a good 5kw system costs about $10,000, cutting the interest burden. Also the systems are more efficient, producing more electricity for lower cost.

So why don’t electricity companies produce their own solar power if it is so good? Surely they would have better economies of scale. Well, no.

Several factors make household generation more efficient than large-scale generation.

First, the land is free. The roof space costs nothing. Secondly, households get cheaper finance than the commercial rates paid by big corporations. Thirdly, the electricity is generated and feed into the grid close to where it is being used. It eliminates the need to transform the electricity to a higher voltage to transport it with less loss and all the wires and infrastructure that goes with that.

Related to that, in many places solar power generation is at it best at one of the peak times of electricity consumption – belting hot, sunny days when air-conditioners are turned up.

Lastly, the tax treatment is different. Residential electricity is off the tax system.

As an investment the panels make sense. Unlike, say, a fixed deposit which gets eaten by inflation and tax, the returns on a solar-panel investment are not taxed (at least not yet) and they are inflation proof because electricity prices keep going up and so to do the savings.

Better yet, other electricity savings, such as LED lights, efficient appliances and the like still make sense, because the less you use the more electricity you notionally send to the grid. Or more simply the less you use the less you pay for.

For some state governments, it pays to subsidise residential power generation. As more solar comes on, they can put off the next very expensive step in new coal or gas electricity generation.

Now, let’s return to Kant and Mill. On their test people can be comforted because if everyone does their best to reduce carbon going into the atmosphere, the result will be to reduce global warming and all the harmful things it will do to millions of people. The action passes the universality test and the test of the greatest good for the greatest number.

Further, if enough people individually go down the solar path and put solar energy into the grid, it may help those who cannot because they cannot raise the money for the investment or their residential or business buildings are unsuited for panels.

The upshot will be to cancel the Government’s lack of action. After all, governments can set whatever targets they like for carbon emission. But the achievement of those targets depends on action by individuals and businesses, whether on moral-philosophic grounds or on economic grounds, or a combination of both.

DOT DOT DOT

Further to earlier columns of the Malu Sara case. Recall that the coroner refused to refer the case to the Queensland Director of Public Prosecutions. The relatives of the two dead Immigration Department officers and three others who were lost at sea took legal action to force him to do so.

Last month the High Court finally said there was no legal basis to force the issue.

One of those drowned was the skipper of a Department of Immigration vessel who was ordered to sea by his superior despite the vessel not being properly equipped for open-water passage – no GPS and only an early-model EPIRB (Emergency Positioning Indicating Radio Beaon).

The families want an investigation into whether charges should be laid. Legal force has failed, but perhaps common humanity and the public good should jolt the Queensland Attorney-General Jarrod Bleijie into looking at the matter afresh and referring the matter to the DPP.

If the Immigration officers had been white and drowned in Sydney Harbour prosecuting authorities would have been all over the case spurred on by the shock jocks and the tabloid press. But they were black and lost in the Torres Strait.
CRISPIN HULL
This article first appeared in The Canberra Times on 9 November 2013.