Energy: the Heart of All Living Systems

Peter Smith09 Jun, 2024 4 Min Read
Just keep the government out of it.

Opening my national newspaper the other day, I came across a full-page advertisement by Standard Chartered Bank. Headed: “Accelerating Australia’s net zero journey: the Melbourne Renewable Energy Hub.” I suppose the intent is to portray Standard Chartered as the financial institution of choice if you intend establishing a renewable-energy boondoggle and need to borrow funds. Though the wokesters at the bank might not quite put it that way.

The project is to install Tesla batteries on the fringe of Melbourne’s suburban sprawl. One of the world’s biggest array of batteries, we are told. The renewable-energy construction company Equis is installing the batteries on behalf of the Victoria state government’s State Electricity Commission (SEC). Comrade Daniel Andrews, when premier, revived the SEC to make renewable energy part of government. Might as well. After all, taxpayers meet the bills one way or another.

There are three battery packs. Each of two of them provide 200 megawatts for two hours and the third provides 200 megawatts for four hours. Those quick at arithmetic will calculate that the total dischargeable power is 1.6 gigawatt hours; provided, of course, the batteries are charged sufficiently beforehand. A reminder, batteries don’t generate power, but only store it.

The free market at work and play.

The cost of the project is expected to be about one billion Aussie dollars and counting. For a battery? “Tish-tosh, never mind the money,” scolds never-had-a-real-job Jacinta Allan, the replacement socialist premier of the heavily-indebted socialist state. “Imagine the role these shiny new batteries will play in meeting our goal of going from nine percent of electricity provided by renewables today to 95 percent by 2035.” I know, it is beyond parody.

Victoria consumes about 42,000 gigawatt hours of power each year. That comes to about 115 gigawatt hours each day or 72 times the discharging capacity of the batteries. Victoria has three remaining brown coal power stations. Yallourn, due for closure in 2028, provides 1.45 gigawatts of power each and every hour. So the batteries could fill in, when fully charged, for just a smidgen over one hour before the lights go out. Need a bigger battery. Many bigger batteries; and enough spare power to keep them charged.

Someone is making money out of this. Xi Jinping and his crony industrialists, the owners of Singapore-based Equis, Standard Chartered, Elon Musk and his fellow Tesla shareholders, those shipping and trucking batteries; and not forgetting lobbyists and those along the way getting the odd kickback or two. Develop an artificial need, subsidise it, and those looking for an opportunity to make easy money will come a-running. Incidentally, a word to the wise, don’t get between a subsidy and a carpetbagger.

Obviously, there is nothing wrong with moneymaking per se. It is an essential feature of free-market capitalism. It drives the process of allocating resources in ways which produce prosperity and sustained growth. However, in this case, the moneymaking is not a product of free-market forces. It is a product of a government-funded contrivance; inevitably resulting in resources being misdirected and wasted.

Works for everybody.

Entertain no doubt: only free-market capitalism steers resources judiciously. Nothing else works. Capitalism works due to its having the characteristics of a living system. Living systems are open systems, which self-organise and interact with their environment. James Grier Miller (Living Systems, 1978) wrote the defining work on the subject. Open systems have the capacity to survive and grow. The second law of thermodynamics has its way with all closed systems. Entropy undoes them.

Open systems have both outputs and inputs, the latter being relatively complex in order to continually reinvigorate the system. And they have a “decider” which regulates the interactions of inputs. Among alternative systems of organising economic affairs, capitalism uniquely fits the bill.

Capitalism draws in a complexity of inputs (resources): raw materials; physical and financial capital; labor and skills; invention, innovation and entrepreneurship; and enough energy to drive machines, without which nothing happens. It produces outputs in the form of structures, goods and services. Its “decider” is market prices which modulate the use and application of resources in order to repair and renew the system, and to produce outputs of more value than the value of the resources which were used in their production.

Why store electricity when you can generate it?

Now consider big batteries. Built as a result of government fiat in a walled-off climate-cult echo chamber. Market forces are prevented from operating. Price is whatever it takes. Is more value produced than the value of the inputs? No, but who cares, there’s a planet to save. As Miller notes:

Walling off living systems to prevent [free] exchanges across their boundaries results in death by confinement... entropy will always increase in walled-off living systems.

Effective sources of energy are being discarded and replaced with costly, heavily-subsidised, ineffective sources; supposedly to cool the planet. The destruction of value which this quixotic quest is bringing about is unparalleled in peacetime. And the carnage is only beginning. Coal, oil and gas still accounted for 82 percent of the world’s energy consumption in 2022. So much to do, and so little time before the planet boils.

Nothing new about governments destroying value. Clearly, wages paid to bloated armies of public servants well exceed the value they bring to society. Capitalism is robust enough to shrug off this waste, as it is to accommodate any number of prodigal harebrained government programs and schemes. Energy is in a different ballpark. Energy is at the heart of all living systems. Mess with that enough and we are destined to regress to a ruder state of society. And from there, who knows to what deprivations and degradations.

After a career in economics, banking and payment-systems management, Peter Smith now blogs on the topics of the day. He writes for Quadrant, Australia’s leading conservative online site and magazine. He has written Bad Economics, of which, he notes, there is much.


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One comment on “Energy: the Heart of All Living Systems”

  1. The goal here is not to "cool the planet" or even to reduce carbon emissions. The goal is to ration energy. It's a power play. The money has already been wasted - $7.5 billion was allocated two years ago for EV charging stations in the U.S. As of today, only eight have been built. It is a wealth transfer scheme and it's not being hidden. Today it's called "Net Zero," tomorrow it will be called something else.

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