Interest rates and global warming?

Comments:
Strong domestic economy caused the norwegian central bank to increase interest rates by 0,25% today, dispite the fact that a stronger local currency will make it even harder for the export industry to compete in the global market.

So, why do I talk about a relationship between interest rate policies and global warming? When you need to tighten the domestic economy to prevent inflation - isn't adding more tax to the cost of electricity a good alternative (or supplement) to the frequent increases in interest rates ? Increasing taxes on electricity will not only curb inflation, but it will speed up the adoption of energy saving projects - and it will also have an element of distributive politics (people who own the biggest houses pay the most). Such a measure will not strengthen the exchange rate in the same way, and hence will not aggravate the situation for the export industry.

Should energy saving measures provide some environmental benefit, Norway must also increase the export capacity of the power grid (multiple cables to Europe). If no excess power can be sold to Europe, supply of electricity will exceed demand and prices will plunge.

Many people have recently argued that we must avoid adding to the capacity of the transmission of electricity between Norway and the rest of Europe. They say that synchronizing the prices of electricity with the rest of Europe is a bad thing - and is only being pushed by profit-hungry power companies. Electricity prices that Norwegian industry must pay is currently below the level their competitors out there pay. They should be able to make a profit with European electricity prices (or move production to where it can be produced at competitive prices). Private households will have less money to spend (and drive inflation) either way - tax on electricity or higher interest rates. As a reminder, look to the United States and what artificially low gasoline prices did to the use of cars. At the other end of the spectrum, look to Europe to see what high energy prices have done to the daily routines like switching off the lights when you leave a room (if you don't move quickly up the stairs, the lights are switched off automatically before you get to the next level).

In addition, there are other more technical arguments why we need to add more cables between us and Europe. This fall, we had two examples of large quantities of clean energy that was lost because we lacked the capacity for the exchange of energy between Denmark and Norway. In Denmark there was a storm and since this happened over a weekend, it was not enough demand for power in the grid - and they simply had to disconnect the wind turbines from the power grid (a grid that does not have the ability to store energy). That same week, there was a story on the TV2 News that the local power company (BKK) had to let the water in reservoirs flow outside the turbines - because they produced too much power and magazines could not be filled more.

When there is no wind in Europe, they should be able to draw on hydropower from Norway (which we can save and "let go" when it suits us). Similarly, they should be able to export energy to us when the wind generates "too much" power - because we can use this energy to pump water up to the reservoirs (where the energy can be saved and released again when there is no wind in Denmark or overcast in Spain - so that the solar powerplants do not produce electricity).
Events:
More than a 100 world leaders have now arrived in Copenhagen and take over for the environment ministers.

The demonstrations outside continue and so does the talk of police brutality.

Inside the COP15 building, there seems to be a bigger gap between the developed- and the developing countries than when they started the negotiations a week ago. There are still many challenges that the delegations must face before they can leave on Friday - with the results we all hope for.

Progress:
Only 2 days until they promised to have all the extra ventilation work done (new fan, adding the heated air after the aggregate, reducing noice) - but nothing was done today either.