Biggest UK solar plant approved

The government last week approved the building of the UK’s largest solar plant on the Kent coast. The plant is likely to provide a number of economic benefits, including low-cost, renewable energy and jobs to the local community. However, some residents are concerned about the safety risks associated with the storage system.

Renewable energy helps to reduce negative production externalities associated with non-renewable energy that is both unsustainable and a heavy pollutant; consider the toxic effects of burning coal to produce electricity. Externalities are third party effects which are ignored by the market mechanism so anything that that helps to reduce the negative effects is seen as a good thing helping to correct market failure and achieve allocative efficiency.

There are, however, some issues related to renewable energy; firstly, whilst the production of energy produces very little in the way of emissions, the production of equipment; solar panels, wind turbines, etc, is not emission-free. Secondly, some local communities are concerned about the impact on their quality of life and house prices. It is one reason why so many wind farms are built offshore. In this particular case, local Kent residents are concerned about the risks of exploding energy storage batteries, required given that the sun does not always shine. These costs may include higher insurance premiums and lower house prices, even if the batteries do prove to be safe. Having said that, living next door to an oil field is unlikely to be on many homebuyers wish list, unless, of course, one has drilling rights.

One positive note for the government is that the project is being paid for by the private sector and requires no government subsidy. Welcome relief given last month’s record budget deficit of £62bn. Subsidies for the solar industry were cut some years ago as a result of the mass production of panels in China and their, subsequent, fall in price.

Read the orignial BBC News article.

Government proposes energy drinks ban for children – BBC News

High levels of sugar and caffeine have been linked to obesity and other health issues.

Source: Government proposes energy drinks ban for children – BBC News

Energy drinks contain high levels of caffeine and sugar. A can of Monster, for example, includes 160mg of caffeine and 55g of sugar. Such high levels can create physical and mental health problems for consumers, these are known as ‘private costs’. However, excessive levels can also create spillover costs for third parties, for example, lower productivity at work or increased pressure on the NHS. These costs are known as external costs or ‘negative externalities’. The problem is that the market tends to ignore these costs resulting in an inefficient allocation of resources. In order to reduce consumption, the government has a series of options. Recently we have seen the introduction of a sugar tax, which should increases firms costs and lead to higher prices. However, the government has decided they need to take more direct action on energy drinks by using an alternative means of intervention, regulation. Approximately 68% of buyers of energy drinks in the EU are aged 10-18, so the UK ban is likely to have a significant effect on firms revenues and profits. One issue for the government is that, unlike a tax, which raises revenue, regulation needs enforcement, which creates administrative costs. There is also an alternative view, that consumers should be free to make their own choices. However, that, in my view, is a difficult case to make when you think about the relentless efforts of the marketing departments at Red Bull et al and the fact that so many of the buyers are children.

Nimble entrepreneurs seek solutions to air quality crisis | The Guardian

With 55% of Chinese consumers looking to reduce pollution exposure and a London mayor focused on clean air policies, the market is growing

Source: Nimble entrepreneurs seek solutions to air quality crisis | Guardian Small Business Network | The Guardian

A standard market failure essay question would ask you to consider whether government intervention is required to correct a market failure or would it be best left to market forces. This article explores the role of the latter in the context of air pollution and the growth in the number of firms producing goods to both monitor and reduce the impact of air pollution.

The world’s largest cruise ship and its supersized pollution problem | Environment | The Guardian

As Harmony of the Seas sets sail from Southampton docks on Sunday she will leave behind a trail of pollution – a toxic problem that is growing as the cruise industry and its ships get ever bigger

Source: The world’s largest cruise ship and its supersized pollution problem | Environment | The Guardian

Super-sized cruise-liners offer their owners significant economies of scale, which helps to bring down unit costs and prices, making cruising affordable to the masses. However, it comes with a social cost that is not reflected in the market price. Cruise ships emit very large levels of toxins that adversely effect the atmosphere, in particular where they dock. In addition to the noise and air pollution generated by the liner itself, local residents can also expect to see increased congestion as passengers come and go. Clearly some benefit from increased trade thanks to the spending of holidaymakers, but does this increased income cover the additional external costs?