- We offer below an analysis of the type that ought to be ignored by policymakers, but on which they place most faith: a model of our energy systems.
- The objective of the model is to illustrate where many of the assumptions underlying dirigiste energy policy ignore the devilish details. It is not intended to provide a better guide to dirigisme than the basis of current policy. It is to illustrate that:
- Taking some factors into account that are minimised in the analysis underpinning policy raises serious questions about the conclusions of that analysis, and
- This is still sufficiently imperfect that policy-making should be conducted on a different basis. We should assume that policy-makers cannot overcome the knowledge problem, and harness the tools (decentralisation and discovery, coordinated through the price mechanism) that humanity has evolved over millennia to cope with such complexity and uncertainty.
- What follows is a description of that model. If you know a bit about energy, you should spot many places where the assumptions either conceal significant detail or are subject to a significant amount of uncertainty.
- One problem with uncertainty and complexity is that they are multiplicative. Each assumption may be reasonable and not too uncertain. Each element of the model may be the most reasonable simplification of reality available. But when there are hundreds of assumptions or model-elements, as there inevitably are in a subject as complex as energy, the product of all of them is such uncertainty, imprecision and path-dependency that only a charlatan would portray the outcome as sufficiently certain to provide a useful basis to pick winners. And only a fool would not see through that charlatan’s claims, however many letters they have after their name and however lofty their seat of learning or corporate influence.
