I am still digesting all I learnt at the conference on Wednesday, but here is a small and self-contained item, namely Canada’s feeble response to its Kyoto commitments. This is not hot news, and frankly I am not sure why this had not come to my attention before.
Unlike the US, Canada ratified the treaty in 2002. In so doing, Canada made a binding commitment to reduce its greenhouse gas (GHG) emissions by 6% below 1990 levels by 2012. In January 2006, Canada elected a conservative government which had opposed Kyoto, but even before that Canada was seriously off-track. GHG emissions rose 27% between 1990 and 2004, whereas in the US (which has never ratified the treaty) they had gone up by ‘only’ 16%.
In 2006, Canada belatedly introduced legislation (Bill C-30, “The Clean Air Act”) to deal with GHG emissions. As far as I can ascertain this bill has still to pass into law, but I think it may be close. For an account of the legislative process through last June (I can find nothing more recent) see http://www.mcmbm.com/Upload/Publication/GlobalWarming_0607.pdf.
More troubling, it has been amended over time to favor intensity-based targets rather than absolute ones. An intensity-based target limits GHG emissions per $ of GDP, and is ineffective for a number of reasons, not least of which is that it prevents Canadian companies from participating in carbon markets (for example the EU’s Carbon Trading System or buying credits under the Clean Development Mechanism to finance clean projects in China and elsewhere) and thereby getting the biggest bang for their buck. Rather than my repeating all the arguments see http://www.climateactionnetwork.ca/e/resources/publications/member/dsf-intensity-targets.pdf for a discussion of what’s wrong with intensity based targets.
(With the recent change in government in Australia, that country became the 107th country to ratify the treaty, which came into effect in 2005. There is a very useful Wikipedia entry on the efforts of various countries that ratified the Kyoto Protocol at http://en.wikipedia.org/wiki/Kyoto_Protocol.)
Friday, February 29, 2008
Thursday, February 28, 2008
Business & Climate Change Conference
Yesterday I attended this conference sponsored by The British Consulate General of Houston, The Climate Group, and Shell Oil Company. I was there for almost 12 hours – ok, the last hour or so was a rather well catered reception – and picked up enough information to fill the blog for weeks. This will take some time to organize, however, so this is just an introduction.
The venue was the Federal Reserve's very impressive Houston building, which is even more impressive when one considers that this is just a branch of the 11th district, headquartered in Dallas. Security was strict; rather like an airport except that we did not have to take off our shoes and I had the impression that the guards actually knew what they were doing. No photography allowed. The building houses the Fed’s largest vault. There is a collection of historical bank notes on display in the lobby, as well as a gold bar with an on-line electronic display of its current value. With recent increases in the price of gold, yesterday the bar (about the size of a brick) was worth $383,549. As one might imagine, there was considerable criticism of the Bush administration during the conference, and it is at least nice to know we live in a country where you can do this in a federal building without getting arrested!
Yesterday’s event was relatively small, allowing plenty of interaction with the speakers, who included the British Consul, Paul Lynch, and Rick Lazio of JPMorgan Chase and a four-term congressman who ran against Clinton for the senate in 2000. The keynote speech was given by John Hofmeister, President of Shell Oil Company, and was curiously off-topic. His concern seems to be reliance on foreign oil rather than climate change, and his solutions have to do with more domestic conventional and unconventional oil and gas development. This was not received well by any delegate I spoke to, one saying he thought Hofmeister had come to the wrong conference. There was however a more encouraging presentation from Bill Spence, Vice President of Shell International Renewables. Overall, the conference was very interesting and very optimistic about our ability to deal with climate change. Much more to follow.
Today the action moves on to the Houston’s Presidential Summit on America’s Energy Future (http://www.houstonspresidentialsummit.com/) organized by the greater Houston Partnership. All presidential hopefuls were invited, but apparently only Senator Clinton has so far accepted. (And as I listen to the radio this morning it seems she is in Ohio so it is not clear she will show up.) I am unable to attend anyway, but I am not sure I would want to; they advise arriving 2 hours early because of security. This will also be a much bigger event than yesterday's rather intimate one.
The venue was the Federal Reserve's very impressive Houston building, which is even more impressive when one considers that this is just a branch of the 11th district, headquartered in Dallas. Security was strict; rather like an airport except that we did not have to take off our shoes and I had the impression that the guards actually knew what they were doing. No photography allowed. The building houses the Fed’s largest vault. There is a collection of historical bank notes on display in the lobby, as well as a gold bar with an on-line electronic display of its current value. With recent increases in the price of gold, yesterday the bar (about the size of a brick) was worth $383,549. As one might imagine, there was considerable criticism of the Bush administration during the conference, and it is at least nice to know we live in a country where you can do this in a federal building without getting arrested!
Yesterday’s event was relatively small, allowing plenty of interaction with the speakers, who included the British Consul, Paul Lynch, and Rick Lazio of JPMorgan Chase and a four-term congressman who ran against Clinton for the senate in 2000. The keynote speech was given by John Hofmeister, President of Shell Oil Company, and was curiously off-topic. His concern seems to be reliance on foreign oil rather than climate change, and his solutions have to do with more domestic conventional and unconventional oil and gas development. This was not received well by any delegate I spoke to, one saying he thought Hofmeister had come to the wrong conference. There was however a more encouraging presentation from Bill Spence, Vice President of Shell International Renewables. Overall, the conference was very interesting and very optimistic about our ability to deal with climate change. Much more to follow.
Today the action moves on to the Houston’s Presidential Summit on America’s Energy Future (http://www.houstonspresidentialsummit.com/) organized by the greater Houston Partnership. All presidential hopefuls were invited, but apparently only Senator Clinton has so far accepted. (And as I listen to the radio this morning it seems she is in Ohio so it is not clear she will show up.) I am unable to attend anyway, but I am not sure I would want to; they advise arriving 2 hours early because of security. This will also be a much bigger event than yesterday's rather intimate one.
Wednesday, February 27, 2008
Misuse of Congestion Pricing
Motorists in Central London have incurred a congestion charge for some time, paying £8 per day to drive within the central area. The scheme is generally regarded as a great success, with cities around the world looking to emulate it and the UK considering a nationwide congestion charge scheme to replace the current road fund license.
London’s controversial mayor. Ken Livingstone, now plans to increase the charge for high-emission vehicles (those emitting more than 225 grams per kilometer of CO2) to £25 per day.
The Financial Times last Wednesday reported that Porsche is planning a legal challenge to the plan. It also reports that owners of high-emission vehicles who live within the congestion zone will no longer get the 90% discount which means they currently pay only 80 pence per day. This is however a little misleading, because the discount applies only if one pays quarterly. Non-residents by contrast have to pay daily if they drive within the zone. So, without the discount the residents will be in the same situation as non-residents and will pay only if they use their cars.
So whose side am I on? Having only two levels of charge separated by a factor of 3 seems too blunt an instrument. And an additional £17 seems excessive, given that an appropriate carbon tax would probably add only something like 25 pence to a gallon of gas. It is hard to use 68 gallons of gas per day in central London, even in a 911! But my main objection is that the original purpose was to tax congestion rather than greenhouse gas emissions, which are not a problem local to central London. I think Ken should stick to the original purpose, and let the UK or indeed the EU worry about emissions.
London’s controversial mayor. Ken Livingstone, now plans to increase the charge for high-emission vehicles (those emitting more than 225 grams per kilometer of CO2) to £25 per day.
The Financial Times last Wednesday reported that Porsche is planning a legal challenge to the plan. It also reports that owners of high-emission vehicles who live within the congestion zone will no longer get the 90% discount which means they currently pay only 80 pence per day. This is however a little misleading, because the discount applies only if one pays quarterly. Non-residents by contrast have to pay daily if they drive within the zone. So, without the discount the residents will be in the same situation as non-residents and will pay only if they use their cars.
So whose side am I on? Having only two levels of charge separated by a factor of 3 seems too blunt an instrument. And an additional £17 seems excessive, given that an appropriate carbon tax would probably add only something like 25 pence to a gallon of gas. It is hard to use 68 gallons of gas per day in central London, even in a 911! But my main objection is that the original purpose was to tax congestion rather than greenhouse gas emissions, which are not a problem local to central London. I think Ken should stick to the original purpose, and let the UK or indeed the EU worry about emissions.
Tuesday, February 26, 2008
Better Late then Never?
It is reported by the BBC (http://news.bbc.co.uk/2/hi/science/nature/7263225.stm) and others that the US is ready to accept binding international obligations on reducing greenhouse gas (HGH) emissions if other nations do the same. I am not sure this is a change of position, since the main objection to Kyoto was the different treatments of the so-called BRIC (Brazil, India, and China) countries.
The statement was made Monday by Daniel Price, President Bush's deputy national security adviser for international economic affairs, at a press conference in Paris. “An effective framework requires the participation of all major economies, developed and developing alike,” said Mr Price. “Europe and the US could turn out the lights today, and come 2030 or 2050 we would not have addressed the problem of climate change.”
The US comments stem largely from a process initiated by President Bush last year, rather than in support of the ongoing UN process. The latter is based upon the IPCC (the Intergovernmental Panel on Climate Change), which last met in Bali last year, and the Kyoto protocol and its replacement due in 2012. I imagine the US is going his own route to save face after refusing to ratify Kyoto, so I think this will change with the new administration, whoever wins. In the eleven months Bush has remaining, it is unlikely that much will come from this apparent change in direction. But at least it might get the dialog with Europe and others on a more constructive basis.
The statement was made Monday by Daniel Price, President Bush's deputy national security adviser for international economic affairs, at a press conference in Paris. “An effective framework requires the participation of all major economies, developed and developing alike,” said Mr Price. “Europe and the US could turn out the lights today, and come 2030 or 2050 we would not have addressed the problem of climate change.”
The US comments stem largely from a process initiated by President Bush last year, rather than in support of the ongoing UN process. The latter is based upon the IPCC (the Intergovernmental Panel on Climate Change), which last met in Bali last year, and the Kyoto protocol and its replacement due in 2012. I imagine the US is going his own route to save face after refusing to ratify Kyoto, so I think this will change with the new administration, whoever wins. In the eleven months Bush has remaining, it is unlikely that much will come from this apparent change in direction. But at least it might get the dialog with Europe and others on a more constructive basis.
Monday, February 25, 2008
Behavioral Economics
Dan Areily’s new book “Predictably Irrational: The Hidden Forces That Shape Our Decisions” seems to be getting a lot of press lately, having been reviewed in newspapers and Dan having been interviewed on NPR. It is the subject of a review, written by Elizabeth Kolbert, in this week’s New Yorker. Ms. Kolbert is the author of “Field Notes from a Catastrophe,” an anecdotal book about climate change (which I recommend by the way), but she does not link the two issues in the review.
Dan Areily’s book is a popular one on the subject of Behavioral Economics, which studies what people actually do when faced with economic choices rather than what Adam Smith thought they should do. It turns out that we are not very rational, and that calls into question the validity of a lot of classical economics. The invisible hand might be blind also, and maybe a bit tipsy. I got to thinking what this might mean for carbon pricing. (I should perhaps add here that I have yet to read the book, so this thinking might be premature.)
As discussed last week, a “sensible” price for carbon emissions is probably in the $10 to $50 range per metric ton, which translates into 10 to 50 cents on a gallon of gas or 1 to 5 cents per kilowatt hour on the electricity bill. This extra cost is meant to provide: the power company with an incentive to develop alternative energy sources; industry to find less energy-intensive ways of making products, and indeed entirely new products which use less energy; and consumers to demand and buy products which use less energy and to otherwise alter their life styles to use less energy. Furthermore, if classical economics holds sway and we all behave rationally, it is meant to cut emissions in a way that does least damage to our standard of living. But will it work?
We can probably rely upon industry to do its bit. At least we should hope that well-run corporations make their decisions on a rational basis. Fortunately their rationale includes their desire to look good, so if anything they are probably going to put more emphasis on going green than would be warranted by a strict calculation of the cost. Right now there is no cost, but companies are already beginning to behave as if a carbon tax or a cap-and-trade system were in place. This is partly because a lot of their decisions have long-term consequences, but also because of the public relations benefits.
As an example of this, I read somewhere that over half the coal fired power stations that were planned in 2000 have since been cancelled. Carbon Moratorium Now (www.cmn.org) reports that 59 such stations were cancelled in 2007 alone, while here in Texas (where we have more wind power generation on line than any other state), 8 of the 11 coal-fired stations planned by TXU were recently cancelled as a condition of its prospective new owners.
But what about us consumers? Here are a couple of statistics:
Yet:
It is hard to think that we will change our habits because of a 10 cent increase in the price of gas, especially as this is dwarfed by recent increases due to normal demand and supply issues. But we are changing our habits. Prius outsold Explorer last year, and I saw my first Smart ForTwo in Houston last week. I was gratified to see two hybrids in the paddock of a vintage car race meeting at the weekend, showing that even us petrol-heads are concerned. (This was a casual observation; I was not looking for hybrids, let alone counting them. I just happened to notice the inconspicuous badges on these Hondas.)
I doubt that it is the possibility of another 10 or even 50 cents on a gallon of gas that is motivating people though. For now, I think the irrational motivations – by which I mean motivation not based on pure self interest – is working in favor of conservation rather than against it. Let’s keep it that way!
But if consumers don’t do our bit, industry will take up the slack in a cap-and-trade system. The solution will be a little less than optimal, measured in strictly economic terms, but one could argue that if we are happy with our choices then by definition they were the best.
Dan Areily’s book is a popular one on the subject of Behavioral Economics, which studies what people actually do when faced with economic choices rather than what Adam Smith thought they should do. It turns out that we are not very rational, and that calls into question the validity of a lot of classical economics. The invisible hand might be blind also, and maybe a bit tipsy. I got to thinking what this might mean for carbon pricing. (I should perhaps add here that I have yet to read the book, so this thinking might be premature.)
As discussed last week, a “sensible” price for carbon emissions is probably in the $10 to $50 range per metric ton, which translates into 10 to 50 cents on a gallon of gas or 1 to 5 cents per kilowatt hour on the electricity bill. This extra cost is meant to provide: the power company with an incentive to develop alternative energy sources; industry to find less energy-intensive ways of making products, and indeed entirely new products which use less energy; and consumers to demand and buy products which use less energy and to otherwise alter their life styles to use less energy. Furthermore, if classical economics holds sway and we all behave rationally, it is meant to cut emissions in a way that does least damage to our standard of living. But will it work?
We can probably rely upon industry to do its bit. At least we should hope that well-run corporations make their decisions on a rational basis. Fortunately their rationale includes their desire to look good, so if anything they are probably going to put more emphasis on going green than would be warranted by a strict calculation of the cost. Right now there is no cost, but companies are already beginning to behave as if a carbon tax or a cap-and-trade system were in place. This is partly because a lot of their decisions have long-term consequences, but also because of the public relations benefits.
As an example of this, I read somewhere that over half the coal fired power stations that were planned in 2000 have since been cancelled. Carbon Moratorium Now (www.cmn.org) reports that 59 such stations were cancelled in 2007 alone, while here in Texas (where we have more wind power generation on line than any other state), 8 of the 11 coal-fired stations planned by TXU were recently cancelled as a condition of its prospective new owners.
But what about us consumers? Here are a couple of statistics:
74% of Americans believe high gasoline prices are a "serious" or "somewhat serious" problem. (Source: Quinnipiac University Poll. June 5-11,
2007), and
81% of Americans believe gasoline prices are "unreasonable." (Source: CNN/Opinion Research Corporation Poll. May 4-6,
2007.)
Yet:
64% of Americans would be willing to pay higher gasoline/fuels taxes to support development of alternative energy sources. (Source: CBS News/New York Times Poll. Apr. 20-24, 2007.)
It is hard to think that we will change our habits because of a 10 cent increase in the price of gas, especially as this is dwarfed by recent increases due to normal demand and supply issues. But we are changing our habits. Prius outsold Explorer last year, and I saw my first Smart ForTwo in Houston last week. I was gratified to see two hybrids in the paddock of a vintage car race meeting at the weekend, showing that even us petrol-heads are concerned. (This was a casual observation; I was not looking for hybrids, let alone counting them. I just happened to notice the inconspicuous badges on these Hondas.)
I doubt that it is the possibility of another 10 or even 50 cents on a gallon of gas that is motivating people though. For now, I think the irrational motivations – by which I mean motivation not based on pure self interest – is working in favor of conservation rather than against it. Let’s keep it that way!
But if consumers don’t do our bit, industry will take up the slack in a cap-and-trade system. The solution will be a little less than optimal, measured in strictly economic terms, but one could argue that if we are happy with our choices then by definition they were the best.
Saturday, February 23, 2008
A Few Home Electricity Saving Ideas
Saturdays I like to talk about things each of us can do individually to reduce our GHG emissions. Last week I told you to move house, but if you have not done that, here are a couple of little things I have done. All my electricity is supposed to be green, from Green Mountain Energy, so these things are not directly saving GHG. But the less renewable energy I use the more capacity there is for others. And I save money.
The first gadget does not in itself save energy. It is the Cent-a-meter, and it monitors your electricity usage. It is very easy to install, with a couple of loops around the wires entering your electricity meter. A small transmitter transmits the usage to a battery-powered monitor in the house. This allows you to see how many kilowatts are being consumed on an almost real-time basis. Mine is currently (no pun intended) showing that I am using 1.28 kW. You can switch things on and off to see the effects, and change your habits accordingly, and maybe pinpoint an old appliance which needs replacing. I found I was spending about $50 per month powering electronic equipment on charge or on standby. I will be trying a smart power strip soon.
I was also concerned about the charger for a new cordless phone I had just bought, because I could see no easy way to avoid having it on all the time. (I could maybe use a smart power strip controlled by a table lamp, but I am not sure how many hours per day the phone needs to be charging.) Cent-a-meter told me it used 0.02 kW, so at 16 cents a kWh cost about $2.30 a month. This is less than 1% of my bill so I decided not to worry about it, at least until I have addressed bigger issues.
Cent-a-meter is an Australian product but marketed in the US. It can also show power consumption as cost per hour or tons of GHG per year, instead of kW. It updates either every 12 seconds or every minute in battery-saving mode. I used the 12-second mode only while experimenting with different appliances etc. See http://www.centameter.com.au/ or http://www.centameter.us/ for more details. There are other products which fulfill the same need but which I have not tried. For example, PowerCost monitor seems to do the same as Cent-a-meter, while Kill-a-Watt allows individual electrical appliances to be monitored. (The Kill-a-Watt would probably get a more reliable reading for the phone, because you cannot rely on everything else in the house staying constant.)
The second gadget is for pool owners, and I credit it with a good deal of the savings I have made (see below). It is called a TightWatt, and it replaces the old-fashioned mechanical time control on the pool pump. As we all know, the pump does not need to run so much in the winter as the summer, but how many people go out and move those little peg things on the dial every month?
This does it automatically, so that the pump comes on for less than an hour in depth of winter and gradually increases to about 8 hours. (These are just my settings, in Houston. It is all programmable.) We are in our winter now, and the pump comes on only briefly. The pool is sparkling clear, and I also save on chlorine. See http://www.tightwatt.com/. I bought only the single-speed single-pump version, by the way. I have a pool sweep on an old-fashioned timer set to run only for less than an hour, synchronized with main pump in mid-winter.
Pools are very inefficient, and there are other things one can do. The main problem is that they try to force far too much water through far too narrow pipes. One solution is to use larger-bore pipes, and this is being done more now on new pools, but this is not really economical to retrofit. Somewhat easier to retrofit is a half-speed pump. These need to be run for twice as long, but there is still a saving since viscous losses go up more than linearly with speed. I heard about these just weeks after replacing my pump with a conventional one, so I have not made the switch yet.
My electricity bills are running about 25% down on what they were a couple of years ago, even though I have retired during that time and now spend every day at home instead of going to the office. The savings are greater in the winter, so I put a lot of that down to the TightWatt. I have also replaced almost all the bulbs in the house with CFLs. I am still very pro-CFL in spite of safety concerns aired in a previous posting.
My sole experience with an LED was bad though. From BBE, it was meant to be equivalent of a 60W bulb. It is in a closet and I often put it on when I get up before dawn. However, once there is any other light – from the dawn or a light in the room – it is impossible to know whether it was on, with the result that it often got left on all day. Which defeats the purpose and the $30 LED is consigned to the trash. (Well, actually it is in a closet; I am a hoarder!)
The first gadget does not in itself save energy. It is the Cent-a-meter, and it monitors your electricity usage. It is very easy to install, with a couple of loops around the wires entering your electricity meter. A small transmitter transmits the usage to a battery-powered monitor in the house. This allows you to see how many kilowatts are being consumed on an almost real-time basis. Mine is currently (no pun intended) showing that I am using 1.28 kW. You can switch things on and off to see the effects, and change your habits accordingly, and maybe pinpoint an old appliance which needs replacing. I found I was spending about $50 per month powering electronic equipment on charge or on standby. I will be trying a smart power strip soon.
I was also concerned about the charger for a new cordless phone I had just bought, because I could see no easy way to avoid having it on all the time. (I could maybe use a smart power strip controlled by a table lamp, but I am not sure how many hours per day the phone needs to be charging.) Cent-a-meter told me it used 0.02 kW, so at 16 cents a kWh cost about $2.30 a month. This is less than 1% of my bill so I decided not to worry about it, at least until I have addressed bigger issues.
Cent-a-meter is an Australian product but marketed in the US. It can also show power consumption as cost per hour or tons of GHG per year, instead of kW. It updates either every 12 seconds or every minute in battery-saving mode. I used the 12-second mode only while experimenting with different appliances etc. See http://www.centameter.com.au/ or http://www.centameter.us/ for more details. There are other products which fulfill the same need but which I have not tried. For example, PowerCost monitor seems to do the same as Cent-a-meter, while Kill-a-Watt allows individual electrical appliances to be monitored. (The Kill-a-Watt would probably get a more reliable reading for the phone, because you cannot rely on everything else in the house staying constant.)
The second gadget is for pool owners, and I credit it with a good deal of the savings I have made (see below). It is called a TightWatt, and it replaces the old-fashioned mechanical time control on the pool pump. As we all know, the pump does not need to run so much in the winter as the summer, but how many people go out and move those little peg things on the dial every month?
This does it automatically, so that the pump comes on for less than an hour in depth of winter and gradually increases to about 8 hours. (These are just my settings, in Houston. It is all programmable.) We are in our winter now, and the pump comes on only briefly. The pool is sparkling clear, and I also save on chlorine. See http://www.tightwatt.com/. I bought only the single-speed single-pump version, by the way. I have a pool sweep on an old-fashioned timer set to run only for less than an hour, synchronized with main pump in mid-winter.
Pools are very inefficient, and there are other things one can do. The main problem is that they try to force far too much water through far too narrow pipes. One solution is to use larger-bore pipes, and this is being done more now on new pools, but this is not really economical to retrofit. Somewhat easier to retrofit is a half-speed pump. These need to be run for twice as long, but there is still a saving since viscous losses go up more than linearly with speed. I heard about these just weeks after replacing my pump with a conventional one, so I have not made the switch yet.
My electricity bills are running about 25% down on what they were a couple of years ago, even though I have retired during that time and now spend every day at home instead of going to the office. The savings are greater in the winter, so I put a lot of that down to the TightWatt. I have also replaced almost all the bulbs in the house with CFLs. I am still very pro-CFL in spite of safety concerns aired in a previous posting.
My sole experience with an LED was bad though. From BBE, it was meant to be equivalent of a 60W bulb. It is in a closet and I often put it on when I get up before dawn. However, once there is any other light – from the dawn or a light in the room – it is impossible to know whether it was on, with the result that it often got left on all day. Which defeats the purpose and the $30 LED is consigned to the trash. (Well, actually it is in a closet; I am a hoarder!)
Friday, February 22, 2008
US Leadership in Clean Technology?
When one thinks about the leaders in efforts to combat climate change, the US does not immediately come to mind. More likely Europe, Japan, or even Costa Rica. But that could be a misleading impression, based solely upon our federal government and in particular its failure to ratify Kyoto. This will of course change soon; all the remaining presidential candidates – even Huckabee, who does not believe in evolution -- are supportive of efforts to combat climate change.
Perhaps more to the point, business is on board, partly in anticipation of GHG emissions carrying a price tag soon. The Financial Times last month published an article about how the amount of US venture capital going into GHG abatement technology was threatening Europe’s lead. According to Cleantech, a US research group, European investment in clean technology companies was only a third of the $3.7bn invested by US investors.
As reported by Reuters and AP, last week saw a UN summit where institutional investors pledged to invest $10bn over the next two years in technologies aimed at reducing greenhouse gas emissions. The plan "reflects the many investment opportunities that exist today to put a dent in global warming pollution, build profits and benefit the global economy," said Mindy Lubber, the president of Ceres, a coalition of investors and environmental leaders, and director of the Investor Network on Climate Risk. Lubber called it the largest meeting of financial leaders ever to focus on climate change and said it would illustrate how the marketplace is starting to transform.
The gathering of 480 investors and other Wall Street types, representing $20 trillion in capital, was organized by groups supporting UN efforts such as the UN Foundation, Ceres and the UN Fund for International Partnerships. For the full Reuters/AP story see http://www.thestar.com/News/World/article/303882
Perhaps more to the point, business is on board, partly in anticipation of GHG emissions carrying a price tag soon. The Financial Times last month published an article about how the amount of US venture capital going into GHG abatement technology was threatening Europe’s lead. According to Cleantech, a US research group, European investment in clean technology companies was only a third of the $3.7bn invested by US investors.
As reported by Reuters and AP, last week saw a UN summit where institutional investors pledged to invest $10bn over the next two years in technologies aimed at reducing greenhouse gas emissions. The plan "reflects the many investment opportunities that exist today to put a dent in global warming pollution, build profits and benefit the global economy," said Mindy Lubber, the president of Ceres, a coalition of investors and environmental leaders, and director of the Investor Network on Climate Risk. Lubber called it the largest meeting of financial leaders ever to focus on climate change and said it would illustrate how the marketplace is starting to transform.
The gathering of 480 investors and other Wall Street types, representing $20 trillion in capital, was organized by groups supporting UN efforts such as the UN Foundation, Ceres and the UN Fund for International Partnerships. For the full Reuters/AP story see http://www.thestar.com/News/World/article/303882
Thursday, February 21, 2008
Gasoline from CO2?
Never ceases to amaze me, but whenever I blog something I read something new within hours which changes my view. Yesterday I said to look for hydrogen and electric for final solution on powering cars. Then, over lunch, I finally got around to reading Tuesday’s papers, and the NYT Science Times section reports a proposal out of Los Alamos national lab to produce synthetic gasoline from the CO2 in the atmosphere. Of course this addresses the fuel problem rather elegantly, but it does not address the energy problem. The energy to do this still needs to come from somewhere, probably a power station. In this it is no different from electric or hydrogen cars. The big advantage however is that no change is required to our cars or to the gas stations we rely upon. Seems like a win-win to me.
Wednesday, February 20, 2008
Diesels vs. Hybrids
The original Toyota Prius came on sale in 2000, when the Ford Explorer was the bestselling vehicle in the US and sales were at their peak. Last year, Prius sales soared nearly 70% to outsell Explorer. This says something about changing attitudes, but are hybrids all they are cracked up to be? Enthusiasm for hybrids seems overblown to me. After all, the energy still comes from gasoline, so the only saving is due to regenerative braking and switching off instead of idling.
Consequently, highway mileage tends to be lower than city mileage, so the benefit you get from a hybrid will depend a lot on your driving mix. Last year, the 2007 Prius topped the EPA’s old fuel efficiency ranking with 60 mpg in the city and 51 mpg on the highway. This year, the EPA has changed the test cycles, so that for most cars both mileage estimates go down 2 or 3 mpg. The change is more detrimental to hybrids, however, and the Prius is now rated at only 48 mpg city, 45 mpg highway.
According to ConsumerAffairs.Com, many Prius owners disputed the 2007 mileage numbers, reporting average fuel economy of 43 mpg. (See http://www.consumeraffairs.com/news04/2006/10/epa_prius.html.) If you own a hybrid, I would like to hear comments about how well they perform in real life, as opposed to the EPA test cycle.
I expect to see growing interest in diesels as a more practical and reliable alternative to hybrids, typically giving about 30% better mileage than equivalent gasoline engines. Also, the engines tend to last longer.
A few manufacturers have introduced diesels recently in the US, notably Mercedes with the E-class Bluetec. Rated at 23 mpg city 33 mpg highway (using the new test), it is very economical for a mid-size luxury car. The Jeep Liberty is also available as a diesel, as are three Volkswagen models. BMW and Audi will follow, as will Honda (including its Acura brand). Subaru has a new diesel version of the Legacy in Europe and that might get to the US next year. Audi might even let us have their 80 mpg A2 TDI, also available in Europe.
The 2008 Volkswagen Jetta TDI is currently probably the nearest US-available diesel to compare with the Prius. It does cost a bit more (it lists at about $25,000 against $22,000) but you are probably more likely to get a deal. EPA numbers are 36 mpg city, 41 mpg highway on the new test. And by all accounts you will have a lot more fun.
But Americans do not seem to like diesels. A recent Kelley Blue Book Marketing Research study found that only six percent of shoppers think diesel is most likely to succeed in becoming a mainstream vehicle power-train type, compared with 40 percent for hybrids, 20 percent for hydrogen fuel cell and 17 percent citing flexible-fuel systems. (Flex fuel vehicles offer the dubious advantage of allowing one to switch to subsidized corn-derived ethanol, which we now know results in more emissions than gasoline as well as enriching corporate farmers and taking corn out of the mouths of poor Mexicans.)
Apparently the main reason for the dislike is that diesels are perceived as noisy and smelly, but this is way out of date. In Europe, diesel already is a “mainstream power-train type”, outselling gasoline powered cars in most markets. If you rent a car in Europe you are likely to get a diesel and you probably won’t even notice the difference. The main difference – apart from filling up from the right pump – is prodigious low-end torque and a corresponding lack of any need or ability to use high rpm. (Enthusiasts may miss this, but most Americans choose an automatic anyway; these drivers are unlikely to care.) Pre-heating when necessary is automatic and quick.
I think the Kelley Book survey is correct in that diesel is not the final answer, but then neither in my opinion is hybrid. I think the future will be either pure electric or hydrogen. The latter may be powered by fuel cell or internal combustion engine as BMW are experimenting with. And of course the electricity or hydrogen has to be produced from a clean source. (Kelly did not even ask about pure electrics, by the way.)
In the shorter term, because of the lack of infrastructure for hydrogen or pure electric, look to diesel and plug-in hybrids.
Consequently, highway mileage tends to be lower than city mileage, so the benefit you get from a hybrid will depend a lot on your driving mix. Last year, the 2007 Prius topped the EPA’s old fuel efficiency ranking with 60 mpg in the city and 51 mpg on the highway. This year, the EPA has changed the test cycles, so that for most cars both mileage estimates go down 2 or 3 mpg. The change is more detrimental to hybrids, however, and the Prius is now rated at only 48 mpg city, 45 mpg highway.
According to ConsumerAffairs.Com, many Prius owners disputed the 2007 mileage numbers, reporting average fuel economy of 43 mpg. (See http://www.consumeraffairs.com/news04/2006/10/epa_prius.html.) If you own a hybrid, I would like to hear comments about how well they perform in real life, as opposed to the EPA test cycle.
I expect to see growing interest in diesels as a more practical and reliable alternative to hybrids, typically giving about 30% better mileage than equivalent gasoline engines. Also, the engines tend to last longer.
A few manufacturers have introduced diesels recently in the US, notably Mercedes with the E-class Bluetec. Rated at 23 mpg city 33 mpg highway (using the new test), it is very economical for a mid-size luxury car. The Jeep Liberty is also available as a diesel, as are three Volkswagen models. BMW and Audi will follow, as will Honda (including its Acura brand). Subaru has a new diesel version of the Legacy in Europe and that might get to the US next year. Audi might even let us have their 80 mpg A2 TDI, also available in Europe.
The 2008 Volkswagen Jetta TDI is currently probably the nearest US-available diesel to compare with the Prius. It does cost a bit more (it lists at about $25,000 against $22,000) but you are probably more likely to get a deal. EPA numbers are 36 mpg city, 41 mpg highway on the new test. And by all accounts you will have a lot more fun.
But Americans do not seem to like diesels. A recent Kelley Blue Book Marketing Research study found that only six percent of shoppers think diesel is most likely to succeed in becoming a mainstream vehicle power-train type, compared with 40 percent for hybrids, 20 percent for hydrogen fuel cell and 17 percent citing flexible-fuel systems. (Flex fuel vehicles offer the dubious advantage of allowing one to switch to subsidized corn-derived ethanol, which we now know results in more emissions than gasoline as well as enriching corporate farmers and taking corn out of the mouths of poor Mexicans.)
Apparently the main reason for the dislike is that diesels are perceived as noisy and smelly, but this is way out of date. In Europe, diesel already is a “mainstream power-train type”, outselling gasoline powered cars in most markets. If you rent a car in Europe you are likely to get a diesel and you probably won’t even notice the difference. The main difference – apart from filling up from the right pump – is prodigious low-end torque and a corresponding lack of any need or ability to use high rpm. (Enthusiasts may miss this, but most Americans choose an automatic anyway; these drivers are unlikely to care.) Pre-heating when necessary is automatic and quick.
I think the Kelley Book survey is correct in that diesel is not the final answer, but then neither in my opinion is hybrid. I think the future will be either pure electric or hydrogen. The latter may be powered by fuel cell or internal combustion engine as BMW are experimenting with. And of course the electricity or hydrogen has to be produced from a clean source. (Kelly did not even ask about pure electrics, by the way.)
In the shorter term, because of the lack of infrastructure for hydrogen or pure electric, look to diesel and plug-in hybrids.
Tuesday, February 19, 2008
The Right to Emit GHG
There are a number of ethical questions surrounding climate change, not least those to do with the fact that many of the people expected to be most affected contribute little or nothing to greenhouse gas emissions because they live in poor countries or are not even born yet. But this post concerns a particular question posed by a comment to my February 6th post, namely: does wealth entitle one to create more greenhouse gas (GHG) emissions? (Actually the comment said CO2, but I am generalizing to GHG.) This got me thinking, which is always dangerous and in this case is probably going to be contentious.
I don’t like left/right political labels much, but on economic issues I think of myself as left-leaning. For example, I think the government has a role in redistributing wealth, as well as in regulating business, for example in preventing fraud, ensuring health safety, protecting the environment, and so on. On the other hand, I am certainly not in favor of a command economy. Marx’s maxim “from each according to his ability, to each according to his needs” has not worked very well. I am therefore basing my analysis on the assumption that we are working within a properly regulated market economy, and I am a little surprised to come up with the answer “Yes, wealth does entitle one to create more GHG emissions.” But first, we need to examine that word “entitle.” My dictionary defines the verb “entitle” as “to give a right or claim to,” so someone who is entitled to something has (been given) a right to it.
There are various sorts of rights. Certain political rights for example are guaranteed by the US Constitution together with its amendments. These rights are not so much granted as proclaimed. One example is the right to free speech. The protection of these rights is in the form of a prohibition of any law which would infringe those rights. It does not guarantee that a particular individual can exercise the right, or regulate the extent to which he can exercise it. For example, someone in a coma has the right to free speech but cannot exercise it. I have the right to free speech but cannot exercise it as extensively as Mitt Romney. (This may well be unfair, and may well be a misinterpretation of the first amendment, but that is the current interpretation.)
The rights that are given, as implied by an entitlement, tend to be the rights to certain kinds of wellbeing, typically goods and services. One might think everyone is entitled to free health care or clean drinking water, for example. Attitudes vary around the world: most western countries regard free health care as a right. The US does not, but it does regard free education as a right. China is meant to be a communist country but provides neither health care nor education free. Which brings me to the contrast between these kinds of rights and the rights guaranteed by the constitution.
A more controversial example of the latter would be the second amendment right to bear arms. This has been interpreted as meaning that every citizen has the right to own a gun, but not even the NRA thinks it means the government should provide them free. Likewise, merely proclaiming the right to free health care would not in itself make it happen; it would just mean free health care could not be made illegal. The point is that the right to a particular good or service has to be granted by someone, and so implies an obligation or duty on that person to provide it. If the government thinks everyone should have clean drinking water, they have the duty to legislate so as to somehow provide it.
I contend that emitting GHG (other than by breathing!) is such a right. Indeed, the way we create these emissions is by consuming goods and services and hence energy. That being the case, the question really becomes “should wealth entitle one to create more GHG emissions” rather than does it. Some authority would need to grant rights to emit GHG, and the implication of the question is actually that this authority would have to restrict those rights. (So maybe this is a third kind of right; one which is taken away by some authority.) Possibly this authority is just ones conscience, but maybe it is an international institution like the UN.
Given a certain worldwide budget for GHG emissions, there are various ways in which we could allocate it between individuals. The free-market way is to price the emissions so that it is reflected in the price we pay for everything. This is efficient because it allows individuals to make choices which maximize their total utility, and also creates an incentive to provide new goods and services with fewer emissions. Another way would be some form of rationing. In addition to paying for a product or service, we would have to hand over a coupon representing the carbon footprint of that product. The coupons could be allocated equally to everyone, and would almost represent a parallel currency. The problem with this idea is that it would severely limit the ability of above-averagely well-off people to spend their money (while giving the poor rights they cannot afford to exercise) and the problem with that is that it removes the incentive that is the basis of the market economy I am assuming.
In other words, unless we are prepared to say that wealth does not entitle one to drink more wine, wear a better suit, or whatever – which is tantamount to making wealth meaningless -- it is hard to see how we could say it does not entitle one to emit more GHG. Having said that, the price mechanism I would advocate for GHG emissions would bear more heavily on the wealthy than the poor. The wealthy would bear the brunt of both the reduction in GHG (since the poor don’t have much to reduce) and the cost of mitigation. It goes some way towards equalizing the emissions of rich and poor, without going to the extent of requiring them to be equal.
If we still think this is unfair, because the poor cannot afford to consume more, we should separate the issue of this unfairness from that of GHG emissions. We should subsidize people rather than emissions. That is, we should enact policies which redistribute wealth from the rich to the poor, who may well choose to spend it on something they want or need more than GHG-intense goods, which is preferable to encouraging them to emit more GGH.
I don’t like left/right political labels much, but on economic issues I think of myself as left-leaning. For example, I think the government has a role in redistributing wealth, as well as in regulating business, for example in preventing fraud, ensuring health safety, protecting the environment, and so on. On the other hand, I am certainly not in favor of a command economy. Marx’s maxim “from each according to his ability, to each according to his needs” has not worked very well. I am therefore basing my analysis on the assumption that we are working within a properly regulated market economy, and I am a little surprised to come up with the answer “Yes, wealth does entitle one to create more GHG emissions.” But first, we need to examine that word “entitle.” My dictionary defines the verb “entitle” as “to give a right or claim to,” so someone who is entitled to something has (been given) a right to it.
There are various sorts of rights. Certain political rights for example are guaranteed by the US Constitution together with its amendments. These rights are not so much granted as proclaimed. One example is the right to free speech. The protection of these rights is in the form of a prohibition of any law which would infringe those rights. It does not guarantee that a particular individual can exercise the right, or regulate the extent to which he can exercise it. For example, someone in a coma has the right to free speech but cannot exercise it. I have the right to free speech but cannot exercise it as extensively as Mitt Romney. (This may well be unfair, and may well be a misinterpretation of the first amendment, but that is the current interpretation.)
The rights that are given, as implied by an entitlement, tend to be the rights to certain kinds of wellbeing, typically goods and services. One might think everyone is entitled to free health care or clean drinking water, for example. Attitudes vary around the world: most western countries regard free health care as a right. The US does not, but it does regard free education as a right. China is meant to be a communist country but provides neither health care nor education free. Which brings me to the contrast between these kinds of rights and the rights guaranteed by the constitution.
A more controversial example of the latter would be the second amendment right to bear arms. This has been interpreted as meaning that every citizen has the right to own a gun, but not even the NRA thinks it means the government should provide them free. Likewise, merely proclaiming the right to free health care would not in itself make it happen; it would just mean free health care could not be made illegal. The point is that the right to a particular good or service has to be granted by someone, and so implies an obligation or duty on that person to provide it. If the government thinks everyone should have clean drinking water, they have the duty to legislate so as to somehow provide it.
I contend that emitting GHG (other than by breathing!) is such a right. Indeed, the way we create these emissions is by consuming goods and services and hence energy. That being the case, the question really becomes “should wealth entitle one to create more GHG emissions” rather than does it. Some authority would need to grant rights to emit GHG, and the implication of the question is actually that this authority would have to restrict those rights. (So maybe this is a third kind of right; one which is taken away by some authority.) Possibly this authority is just ones conscience, but maybe it is an international institution like the UN.
Given a certain worldwide budget for GHG emissions, there are various ways in which we could allocate it between individuals. The free-market way is to price the emissions so that it is reflected in the price we pay for everything. This is efficient because it allows individuals to make choices which maximize their total utility, and also creates an incentive to provide new goods and services with fewer emissions. Another way would be some form of rationing. In addition to paying for a product or service, we would have to hand over a coupon representing the carbon footprint of that product. The coupons could be allocated equally to everyone, and would almost represent a parallel currency. The problem with this idea is that it would severely limit the ability of above-averagely well-off people to spend their money (while giving the poor rights they cannot afford to exercise) and the problem with that is that it removes the incentive that is the basis of the market economy I am assuming.
In other words, unless we are prepared to say that wealth does not entitle one to drink more wine, wear a better suit, or whatever – which is tantamount to making wealth meaningless -- it is hard to see how we could say it does not entitle one to emit more GHG. Having said that, the price mechanism I would advocate for GHG emissions would bear more heavily on the wealthy than the poor. The wealthy would bear the brunt of both the reduction in GHG (since the poor don’t have much to reduce) and the cost of mitigation. It goes some way towards equalizing the emissions of rich and poor, without going to the extent of requiring them to be equal.
If we still think this is unfair, because the poor cannot afford to consume more, we should separate the issue of this unfairness from that of GHG emissions. We should subsidize people rather than emissions. That is, we should enact policies which redistribute wealth from the rich to the poor, who may well choose to spend it on something they want or need more than GHG-intense goods, which is preferable to encouraging them to emit more GGH.
Monday, February 18, 2008
Climate Change and Wine
Quality wine depends upon a lot of factors but not least the climate, indeed the best wines depend upon the microclimate on particular hillsides. So it is not surprising that wine growers are concerned about climate change. They held a conference in Barcelona last week, and I will get to that later, before ending with a note on a report about wine’s carbon footprint. But first a couple of anecdotes:
- It was reported last year that Louis Roederer and other top champagne houses are considering purchasing land in England because Champagne may become too warm. It is rumored that some Champagne houses have already bought in Kent and Sussex in southern England.
- The drought in Australia has been so bad that Australian wine makers do not have enough grapes to satisfy demand. For example, Lindemans is sourcing wine from Chile and South Africa.
The conference began on Friday when Bernard Seguin, head of climate studies at France's INRA agricultural research institute, told delegates that the consequences of global warming are already being felt, adding “Harvests are already coming 10 days earlier than before in almost all wine-growing regions."
"Wine and wine-producing will change in a way that will depend on how we confront global warming,” said Seguin. "If the temperature rises two or three degrees (centigrade), we could manage to see Bordeaux remain as Bordeaux, Rioja as Rioja, Burgundy as Burgundy. But if it goes up five or six degrees, we must face up to huge problems, and the changes will be hard."
Comments from two other attendees quoted by APF:
- "The types of wines will change in almost all regions," said Vicente Sotes, a professor at the Polytechnic University.
- "The French will have problems," especially in the Bordeaux region, said Pancho Campos, the president of the Wine Academy of Spain, who organized the Barcelona conference. “German producers on the banks of the Rhine will be the least at risk,” he said.
- The French "Grand Crus" could be further threatened by the "New World" wines of Australia, California, Chile, Argentina, South Africa and New Zealand, who would have the best climatic conditions. "The countries in the southern hemisphere are next to a greater mass of water, and it is sea currents which maintain the temperature at its level," said Campos.
This is all very speculative in my opinion, because we do not really know how the global rise in temperature will affect individual climates around the world. All we can say for sure is that the wine map of the world will change. Some areas may get better, some worse, while others may adapt their techniques and the varieties they grow. We may see Cabernet and Merlot growing in Burgundy instead of Pinot, though of course this would require changing French wine law.
On a related topic, wine lovers also worry about their carbon footprint. A recent report, “Red, White and “Green”: The Cost of Carbon In the Global Wine Trade” by Tyler Colman and Pablo Paster, studies this. A lot of the carbon footprint is due to transport, so the main findings include:
- Better to drink out of cardboard rather than glass.
- If you must have glass, a larger bottle is better because the ratio of glass to wine is less.
- In the US, if you live to the West of a line that runs down the middle of Ohio and then curves around to split Texas in two, so that Houston (where I live) and the rest of the gulf coast are to the east of it, it is better to drink California wines while to the east it is better to drink French.
Frankly, as a wine lover I find it hard to imagine many people selecting their wines on the basis of these rules, but I am very grateful to be on the French side of the line! And thank god Dr. Vino does not suggest drinking Texan wines.
Sunday, February 17, 2008
CFL Dangers
[I posted this originally in the early hours of Sunday morning, and it was not until lunchtime that I found that coincidentally the New York Times had run an editorial on the subject. See http://www.nytimes.com/2008/02/17/opinion/17sun3.html?_r=1&scp=1&sq=newfangled+light+bulb&st=nyt&oref=slogin.
In looking for the above link, I also found that they had run a story on the subject yesterday, http://query.nytimes.com/gst/fullpage.html?res=9407E3DC143EF93AA25755C0A961958260&sec=&spon=&pagewanted=1.]
A while back I posted about my personal experiences with compact florescent lamps, as a result of which a reader emailed me to warn me of their dangers. All fluorescents contain Mercury, the most toxic non-radioactive metal known to man. It is a neurotoxin and especially dangerous for young children. There is no effective way to clean up after an indoor breakage. Furthermore, there is no effective recycling program. Apparently California may require big bold labels stating CFLs are toxic.
See http://www.newswithviews.com/Peterson/rosalind1.htm -- which also raises concerns about ultraviolet light, lead, and fire hazard -- for more.
In looking for the above link, I also found that they had run a story on the subject yesterday, http://query.nytimes.com/gst/fullpage.html?res=9407E3DC143EF93AA25755C0A961958260&sec=&spon=&pagewanted=1.]
A while back I posted about my personal experiences with compact florescent lamps, as a result of which a reader emailed me to warn me of their dangers. All fluorescents contain Mercury, the most toxic non-radioactive metal known to man. It is a neurotoxin and especially dangerous for young children. There is no effective way to clean up after an indoor breakage. Furthermore, there is no effective recycling program. Apparently California may require big bold labels stating CFLs are toxic.
See http://www.newswithviews.com/Peterson/rosalind1.htm -- which also raises concerns about ultraviolet light, lead, and fire hazard -- for more.
Saturday, February 16, 2008
Carbon Footprint of Suburban vs. City Life
Last Saturday I discussed one very easy thing we could do individually to reduce our carbon footprint, namely to eat less meat. Here is something a bit more disruptive: move to the city. That may sound drastic, but it could also be a smart economic choice.
The 3 top things about real estate are said to be 'location, location, and location,' yet Americans buy houses in the middle of nowhere. Often the price of the structure (a depreciating asset) is actually greater than that of the land. (As Gertrude Stein said, “There’s no there there.” though in truth I have to admit she was referring to the city of Oakland.) This makes no sense as an investment, and in my view has a lot to do with the mortgage crisis. Increasingly Americans pay for larger and larger suburban homes with little intrinsic value and commute dozens of miles to work, but I think this trend is set to reverse. The attraction of the suburbs will decrease – and hence the folly of buying there will become more obvious -- as the cost of energy goes up and as retiring baby-boomers seek homes with less yard to look after and closer to amenities and public transport.
Of course it won’t help much for you to move if someone else takes your place, but if it leads to lower house prices it might at least slow down new development. My advice however is to get out while the going’s good.
City-dwelling is much more energy-efficient that suburban or rural dwelling for many reasons: homes are smaller; apartments insulate each other from heat and cold; transport of goods to stores is more efficient; amenities like schools, hospitals, and stores are closer to home. In some cities a car is unnecessary, most errands being possible by public transport or even on foot. (From my London apartment I can visit bars and restaurants and buy anything from a bottle of milk to a business suit within five minutes walk, while for longer trips the tube station is about 100 yards away.)
There was an article in last Sunday’s New York Times about people struggling to be green in the suburbs. Buying things like wind turbines. Why not just move to the city? The article points out that the average size of an American home almost doubled between 1970 and 2005, while the average commute went up from 8.9 miles in 1983 to 12.1 in 2001. The article also says the average American's carbon footprint is over 3 times that of a resident of New York City. But you don’t have to live in a million dollar Manhattan efficiency to improve your carbon footprint. The NYT article quotes a study done in Atlanta, which found that even moving from a neighborhood with 2 to 4 dwellings per acre to one with 6 to 8 saved about 10%, just because people need to drive less to get to stores etc. Finally, the same study showed that residential energy use for a single family detached home was about 70% more than for a multifamily unit.
Still like your sprawling ranch, or maybe can’t get out because of negative equity? In coming weeks I will talk about what you can do to make wherever you live more efficient, starting next Saturday with a couple of gadgets that have helped me reduce my electricity consumption by 25% over the past year or so. Plus an update on my sole LED lamp, which is now consigned to the scrap heap.
The 3 top things about real estate are said to be 'location, location, and location,' yet Americans buy houses in the middle of nowhere. Often the price of the structure (a depreciating asset) is actually greater than that of the land. (As Gertrude Stein said, “There’s no there there.” though in truth I have to admit she was referring to the city of Oakland.) This makes no sense as an investment, and in my view has a lot to do with the mortgage crisis. Increasingly Americans pay for larger and larger suburban homes with little intrinsic value and commute dozens of miles to work, but I think this trend is set to reverse. The attraction of the suburbs will decrease – and hence the folly of buying there will become more obvious -- as the cost of energy goes up and as retiring baby-boomers seek homes with less yard to look after and closer to amenities and public transport.
Of course it won’t help much for you to move if someone else takes your place, but if it leads to lower house prices it might at least slow down new development. My advice however is to get out while the going’s good.
City-dwelling is much more energy-efficient that suburban or rural dwelling for many reasons: homes are smaller; apartments insulate each other from heat and cold; transport of goods to stores is more efficient; amenities like schools, hospitals, and stores are closer to home. In some cities a car is unnecessary, most errands being possible by public transport or even on foot. (From my London apartment I can visit bars and restaurants and buy anything from a bottle of milk to a business suit within five minutes walk, while for longer trips the tube station is about 100 yards away.)
There was an article in last Sunday’s New York Times about people struggling to be green in the suburbs. Buying things like wind turbines. Why not just move to the city? The article points out that the average size of an American home almost doubled between 1970 and 2005, while the average commute went up from 8.9 miles in 1983 to 12.1 in 2001. The article also says the average American's carbon footprint is over 3 times that of a resident of New York City. But you don’t have to live in a million dollar Manhattan efficiency to improve your carbon footprint. The NYT article quotes a study done in Atlanta, which found that even moving from a neighborhood with 2 to 4 dwellings per acre to one with 6 to 8 saved about 10%, just because people need to drive less to get to stores etc. Finally, the same study showed that residential energy use for a single family detached home was about 70% more than for a multifamily unit.
Still like your sprawling ranch, or maybe can’t get out because of negative equity? In coming weeks I will talk about what you can do to make wherever you live more efficient, starting next Saturday with a couple of gadgets that have helped me reduce my electricity consumption by 25% over the past year or so. Plus an update on my sole LED lamp, which is now consigned to the scrap heap.
Friday, February 15, 2008
New Report Sees Profit in Combating Climate Change
Once again, late breaking news trounces what I had prepared for today. According to the Financial Times yesterday, McKinsey was set to release a report about the cost of addressing climate change, and the man conclusion is that about half of the required reductions in greenhouse gas (GHG) emissions could actually be achieved at a profit. I have not been able to find this report yet on the web, but it seems to be a follow-up to the report they issued last November, prior to the Bali conference. (See http://mckinsey.com/clientservice/ccsi/greenhousegas.asp for a summary and the ability to download the full report, an executive summary, video or slideshow presentation.)
The good news is that McKinsey believes that about half the reductions in greenhouse gas GHG required to meet the IPCC goal of stabilizing GHG atmospheric concentration at 550 ppm not only can be achieved by energy savings using existing technology, but that it can be done at a profit (with an average return of 17%). That would suggest to me that the other half would probably be achievable and profitable with the imposition of a relatively low carbon tax or the equivalent, especially when measures other than energy efficiency are included.
The bad news is that we are apparently not doing it. That is to say, we are not acting in our own economic interest. Adam Smith’s invisible hand is not working. I wonder why? One explanation is that this conclusion must be quite sensitive to the price of fossil fuels, and these have only recently reached the dizzying heights they are today. Other reasons, especially among individuals and small companies, probably include ignorance, apathy, and an inability to make the necessary capital investment. I have also found personally that companies often look for unrealistic rates of return, often expecting a payback period of 2 years. I do not understand why this is; where can they invest and get a 50% return? (For insights into how big business regards climate change issues, see another McKinsey report “How Companies Think about Climate Change,” which indicates that climate change issues are considered mostly with regard to the effect on a company's brands and reputation. This and other McKinsey reports on climate change can be found at http://mckinsey.com/clientservice/ccsi/.)
In the new report, McKinsey looked at all energy-saving technologies which would provide a return of 10% or more and found that adopting all of them would cost about $170 billion a year worldwide (0.4% of global GDP and not much more than the US spends annually on the Iraq war) but would provide an average return of 17% on this investment. It identifies heavy industry in China as the sector with the most to gain, with the second being residential housing in the US, where homes are large, poorly insulated and equipped with a range of appliances that are often themselves inefficient or poorly used, such as air-conditioning systems left on unnecessarily. (US homes happens to be the subject of the posting prepared for tomorrow, Saturday being my day for what individuals can do.)
Overall, out of the $170 billion, $83 billion would be spent on industrial applications, $40 billion would be spent on residential, $25 billion on transportation, and $22 billion on commercial. $38 billion of this would be spent in China and $28 billion in the US.
The good news is that McKinsey believes that about half the reductions in greenhouse gas GHG required to meet the IPCC goal of stabilizing GHG atmospheric concentration at 550 ppm not only can be achieved by energy savings using existing technology, but that it can be done at a profit (with an average return of 17%). That would suggest to me that the other half would probably be achievable and profitable with the imposition of a relatively low carbon tax or the equivalent, especially when measures other than energy efficiency are included.
The bad news is that we are apparently not doing it. That is to say, we are not acting in our own economic interest. Adam Smith’s invisible hand is not working. I wonder why? One explanation is that this conclusion must be quite sensitive to the price of fossil fuels, and these have only recently reached the dizzying heights they are today. Other reasons, especially among individuals and small companies, probably include ignorance, apathy, and an inability to make the necessary capital investment. I have also found personally that companies often look for unrealistic rates of return, often expecting a payback period of 2 years. I do not understand why this is; where can they invest and get a 50% return? (For insights into how big business regards climate change issues, see another McKinsey report “How Companies Think about Climate Change,” which indicates that climate change issues are considered mostly with regard to the effect on a company's brands and reputation. This and other McKinsey reports on climate change can be found at http://mckinsey.com/clientservice/ccsi/.)
In the new report, McKinsey looked at all energy-saving technologies which would provide a return of 10% or more and found that adopting all of them would cost about $170 billion a year worldwide (0.4% of global GDP and not much more than the US spends annually on the Iraq war) but would provide an average return of 17% on this investment. It identifies heavy industry in China as the sector with the most to gain, with the second being residential housing in the US, where homes are large, poorly insulated and equipped with a range of appliances that are often themselves inefficient or poorly used, such as air-conditioning systems left on unnecessarily. (US homes happens to be the subject of the posting prepared for tomorrow, Saturday being my day for what individuals can do.)
Overall, out of the $170 billion, $83 billion would be spent on industrial applications, $40 billion would be spent on residential, $25 billion on transportation, and $22 billion on commercial. $38 billion of this would be spent in China and $28 billion in the US.
Thursday, February 14, 2008
More on Carbon Price, CERA Week Houston
I posted twice about pricing carbon dioxide emission recently. Here are two new developments.
In what could be a U.S. first, California’s Bay Area Air Quality Management District is proposing to charge an annual fee to businesses based on emissions, the Mercury News reports. All 10,000 “stationary sources” of air pollution that the air district regulates would be subject to the fee, 4.2 cents per metric ton of carbon dioxide, including businesses and government agencies.. The Shell oil refinery in Martinez would pay the largest fee, $186,475 a year for its 4.4 million annual metric tons of emissions. The air district’s board could take a final vote by May.
The fee seems ridiculously small. By contrast, FT reported yesterday that in evalulating investment decision US companies were planning on future legislation imposing a charge of betweeen $13 and $40 a metric ton. That's more like it, and within the $10 to $50 range suggested in my post of February 8. The report also noted that this congress had introduced 125 pieces of legislation addressing climate change.
Meanwhile, at the Cambridge Energy Reasearch Associate's conference here in Houston this week, Jim Mulva (CEO of ConocoPhillips) in a keynote address warned that the US risks the loss of geopolitical influence and "incalculable damage" to its efforts to fight terrorism and encourage trade due to its opposition to worldwide action on climate change. I would have said that had already happened.
In what could be a U.S. first, California’s Bay Area Air Quality Management District is proposing to charge an annual fee to businesses based on emissions, the Mercury News reports. All 10,000 “stationary sources” of air pollution that the air district regulates would be subject to the fee, 4.2 cents per metric ton of carbon dioxide, including businesses and government agencies.. The Shell oil refinery in Martinez would pay the largest fee, $186,475 a year for its 4.4 million annual metric tons of emissions. The air district’s board could take a final vote by May.
The fee seems ridiculously small. By contrast, FT reported yesterday that in evalulating investment decision US companies were planning on future legislation imposing a charge of betweeen $13 and $40 a metric ton. That's more like it, and within the $10 to $50 range suggested in my post of February 8. The report also noted that this congress had introduced 125 pieces of legislation addressing climate change.
Meanwhile, at the Cambridge Energy Reasearch Associate's conference here in Houston this week, Jim Mulva (CEO of ConocoPhillips) in a keynote address warned that the US risks the loss of geopolitical influence and "incalculable damage" to its efforts to fight terrorism and encourage trade due to its opposition to worldwide action on climate change. I would have said that had already happened.
Wednesday, February 13, 2008
Breaking News -- Car which runs on Compressed Air!
Sorry this is the second post of the day, but it is car day and I just saw this on BBC site. A five-seater, glass fibre bodied car driven by compressed air stored in carbon-fibre tanks built into the chassis.
The tanks can be filled with air from a compressor in just three minutes, or it can be plugged into the grid and an on-board compressor will do it in four hours.
Full story at http://news.bbc.co.uk/2/hi/science/nature/7241909.stm
The tanks can be filled with air from a compressor in just three minutes, or it can be plugged into the grid and an on-board compressor will do it in four hours.
Full story at http://news.bbc.co.uk/2/hi/science/nature/7241909.stm
Electric Cars in US and Israel
Last Wednesday (which is my regular car day) I talked about the Tesla Roadster, a tiny $98,000 electric two-seater sports car offering considerable performance which certainly is not for everyone. This week I was hoping to talk about more mainstream cars which are in the works, but frankly my research left me quite depressed. (Though there is interesting news from Israel at the end of this post.) Right now I think diesels offer the best environmental solution, and hope to compare these with hybrids next Wednesday.
First, the good news. While Tesla decided to start with a niche car, they do plan additional offerings. To quote the company’s web site, “Our next model will leverage the Tesla Roadster‘s technology, resulting in a less expensive sports sedan that we can sell at higher volume.” (In other words my money will be subsidizing these cars, but no matter!)
By contrast, the two major US car companies have shown only concept cars. General Motors showed the Concept Chevrolet Volt at the recent Detroit Auto Show. GM is calling it an electric car but in fact the car’s “E-Flex” drive system makes it a plug-in hybrid. (Plug-in hybrids are hybrids which you plug in to the electricity supply, typically overnight, so that a typical commute can be achieved without using the gasoline engine. Aftermarket conversions are available for the Prius and other hybrids.) But rather than drive the wheels directly as in current hybrids, the Volt’s internal combustion engine is used just to charge the battery. Which means no extra power boost is available for acceleration, and therefore -- all else being equal -- one needs a more powerful electric motor. This seems a backward step to me, though I suppose running the engine at a constant efficient speed might be an advantage.
Currently the Volt is just a concept car, but GM claims it will build a production car just as soon as the battery technology is available, which they say will be in 2010. I find this hard to swallow, as they are expecting a range of only 40 miles on the batteries which I would have thought was readily available now. I have also not heard anything about performance. There is a lot of hype here, but basically GM is not planning anything that aftermarket amateurs aren’t doing right now.
Ford is a little more adventurous with what they call "HySeries Drive." This is another plug-in hybrid drivetrain but with a hydrogen fuel cell to charge the battery instead of a gasoline engine. Ford claim only 25 miles on the initial full charge, plus 200 miles from the fuel cell. In the absence of hydrogen stations, this would seem to be a problem. The vehicle, a modified Ford Edge, is also pathetically slow, with a top speed of only 85 mph.
It is hard to see the point of combining a fuel cell with grid-charged batteries. Neither electricity nor hydrogen is an energy source; rather they are ways of storing energy in a moving vehicle. Either batteries are the best way to do this, or hydrogen is. They can’t both be. Batteries may be necessary for short-term storage of the energy recovered from braking, but these could be very small and certainly not big enough to warrant charging from the grid. Alternatively, a capacitor or flywheel could be used instead (see my February 5th post) though of course you need a battery to run electrical equipment anyway.
It is hard to avoid the conclusion that both Ford and GM are playing to the gallery, though maybe they are making serious strides towards solving the problem behind the scenes.
Range is clearly a problem at the moment for electric cars. 40 miles may be OK for a typical commute, but every now and again everyone needs to make a longer trip. I would see these cars being practical only for multi-car households where one car would have to be a more conventional one like a diesel or hybrid. (See next Wednesday’s post.)
However, the main obstacle to universal adoption of electric cars is not so much the range but the time it takes to recharge them, typically about 5 hours. Again, this is OK if you can do it overnight prior to your daily commute, but not so convenient if you are on a trip. (I guess it could make for a more relaxed attitude to touring; do 40 miles, find a hotel, and see the sights while you fill up.) This is why the following recent announcement from Israel is so interesting.
Renault-Nissan, the government of Israel, and an electric charging station start-up called Project Better Place have announced a plan to make electric cars part of ordinary life in Israel in the next decade. Project Better Place will build stations where attendants will swap out depleted batteries and put in fully charged ones, saving the several hours typically required to charge a lithium-ion battery pack. Renault-Nissan plans to start shipping electric cars to the country in three years or so and I assume these will be especially designed to make battery replacement quick and easy. The cars will run on batteries being developed under a deal between Renault-Nissan and NEC, but they claim only about 45 mile range in the city and 72 on the highway. Even with fast battery changes, this would seem to be limiting, but the concept of changing the batteries rather than charging them does seem brilliant.
For full announcement see http://www.projectbetterplace.com/.
First, the good news. While Tesla decided to start with a niche car, they do plan additional offerings. To quote the company’s web site, “Our next model will leverage the Tesla Roadster‘s technology, resulting in a less expensive sports sedan that we can sell at higher volume.” (In other words my money will be subsidizing these cars, but no matter!)
By contrast, the two major US car companies have shown only concept cars. General Motors showed the Concept Chevrolet Volt at the recent Detroit Auto Show. GM is calling it an electric car but in fact the car’s “E-Flex” drive system makes it a plug-in hybrid. (Plug-in hybrids are hybrids which you plug in to the electricity supply, typically overnight, so that a typical commute can be achieved without using the gasoline engine. Aftermarket conversions are available for the Prius and other hybrids.) But rather than drive the wheels directly as in current hybrids, the Volt’s internal combustion engine is used just to charge the battery. Which means no extra power boost is available for acceleration, and therefore -- all else being equal -- one needs a more powerful electric motor. This seems a backward step to me, though I suppose running the engine at a constant efficient speed might be an advantage.
Currently the Volt is just a concept car, but GM claims it will build a production car just as soon as the battery technology is available, which they say will be in 2010. I find this hard to swallow, as they are expecting a range of only 40 miles on the batteries which I would have thought was readily available now. I have also not heard anything about performance. There is a lot of hype here, but basically GM is not planning anything that aftermarket amateurs aren’t doing right now.
Ford is a little more adventurous with what they call "HySeries Drive." This is another plug-in hybrid drivetrain but with a hydrogen fuel cell to charge the battery instead of a gasoline engine. Ford claim only 25 miles on the initial full charge, plus 200 miles from the fuel cell. In the absence of hydrogen stations, this would seem to be a problem. The vehicle, a modified Ford Edge, is also pathetically slow, with a top speed of only 85 mph.
It is hard to see the point of combining a fuel cell with grid-charged batteries. Neither electricity nor hydrogen is an energy source; rather they are ways of storing energy in a moving vehicle. Either batteries are the best way to do this, or hydrogen is. They can’t both be. Batteries may be necessary for short-term storage of the energy recovered from braking, but these could be very small and certainly not big enough to warrant charging from the grid. Alternatively, a capacitor or flywheel could be used instead (see my February 5th post) though of course you need a battery to run electrical equipment anyway.
It is hard to avoid the conclusion that both Ford and GM are playing to the gallery, though maybe they are making serious strides towards solving the problem behind the scenes.
Range is clearly a problem at the moment for electric cars. 40 miles may be OK for a typical commute, but every now and again everyone needs to make a longer trip. I would see these cars being practical only for multi-car households where one car would have to be a more conventional one like a diesel or hybrid. (See next Wednesday’s post.)
However, the main obstacle to universal adoption of electric cars is not so much the range but the time it takes to recharge them, typically about 5 hours. Again, this is OK if you can do it overnight prior to your daily commute, but not so convenient if you are on a trip. (I guess it could make for a more relaxed attitude to touring; do 40 miles, find a hotel, and see the sights while you fill up.) This is why the following recent announcement from Israel is so interesting.
Renault-Nissan, the government of Israel, and an electric charging station start-up called Project Better Place have announced a plan to make electric cars part of ordinary life in Israel in the next decade. Project Better Place will build stations where attendants will swap out depleted batteries and put in fully charged ones, saving the several hours typically required to charge a lithium-ion battery pack. Renault-Nissan plans to start shipping electric cars to the country in three years or so and I assume these will be especially designed to make battery replacement quick and easy. The cars will run on batteries being developed under a deal between Renault-Nissan and NEC, but they claim only about 45 mile range in the city and 72 on the highway. Even with fast battery changes, this would seem to be limiting, but the concept of changing the batteries rather than charging them does seem brilliant.
For full announcement see http://www.projectbetterplace.com/.
Tuesday, February 12, 2008
Ban Ki-Moon & Mayor Bloomberg Call for Action
"If 2007 was the year when climate change rose to the top of the global agenda, 2008 is the time we must take concerted action," according to UN Secretary-General Ban Ki-moon, as reported by Associated Press. Ban was speaking yesterday at the beginning of a two-day U.N. General Assembly debate to generate support for a new treaty by 2009 to fight global warming.
Michael Bloomberg, the keynote speaker and New York's climate-activist mayor, called on the United States to set "real and binding" targets to reduce the greenhouse gases blamed for warming the planet, in contrast to the current U.S. strategy that largely relies on voluntary approaches and spending for research and technology. "I believe that the American people are prepared for our responsibility to lead by example," he said.
For full story see http://www.msnbc.msn.com/id/23112240/
Michael Bloomberg, the keynote speaker and New York's climate-activist mayor, called on the United States to set "real and binding" targets to reduce the greenhouse gases blamed for warming the planet, in contrast to the current U.S. strategy that largely relies on voluntary approaches and spending for research and technology. "I believe that the American people are prepared for our responsibility to lead by example," he said.
For full story see http://www.msnbc.msn.com/id/23112240/
Sail Power
I recently read about the maiden voyage of a new freighter, the MS Beluga SkySails, departing out of Bremerhaven for Venezuela. I did a bit of Googling and found another story, dated last year, about the maiden voyage of the same ship set for December 2007, this time carrying windmills from Denmark to Houston. Does anyone know whether that voyage happened?
Not that it really matters. The story is that the Beluga features a large computer-controlled kite to augment the ships diesel engines to save up to 20% of the fuel it would otherwise use. The system is made by Skysails of Hamburg (http://www.skysails.info/index.php?L=1), and the kite is mounted in such a way that it’s tether can rotate around the bow of the ship to provide wind power when traveling in any direction other than direction against the wind.
Not that it really matters. The story is that the Beluga features a large computer-controlled kite to augment the ships diesel engines to save up to 20% of the fuel it would otherwise use. The system is made by Skysails of Hamburg (http://www.skysails.info/index.php?L=1), and the kite is mounted in such a way that it’s tether can rotate around the bow of the ship to provide wind power when traveling in any direction other than direction against the wind.
Monday, February 11, 2008
Carbon Neutral Costa Rica
Two short posts today.
NPR reported today that Costa Rica’s aim to become the first carbon neutral country might be at risk due to the effects of climate change itself. The country produces nearly 80% of its electricity from Hydroelectric plants (and another 18% from wind and geothermal sources) and even a tiny shift in rainfall patterns could leave the country without enough water to meet its growing demand for electricity. Of course, nobody knows exactly what the specific local effects of climate change will be, but scientists think it is likely to have a significant effect on rainfall.
According to Reuters, the aim of cutting Costa Rica’s net greenhouse gas emissions to zero by 2021 was announced by President Oscar Arias in June 2007. (2021 is Costa Rica's 200th birthday.) Costa Rican officials had previously announced plans to eliminate net greenhouse gas emissions by 2027.
Officials say the country will clean up its fossil fuel-fired power plants, promote hybrid vehicles, cut emissions from transport, farming and industry, and increase tree planting to balance its emissions. Government programs to promote reforestation have already put trees on 51 percent of the country, a 10 percent increase over the last decade.
Full NPR story can be found at http://www.npr.org/templates/story/story.php?storyId=18832252
Reuters story can be found at http://www.alertnet.org/thenews/newsdesk/N07289157.htm
NPR reported today that Costa Rica’s aim to become the first carbon neutral country might be at risk due to the effects of climate change itself. The country produces nearly 80% of its electricity from Hydroelectric plants (and another 18% from wind and geothermal sources) and even a tiny shift in rainfall patterns could leave the country without enough water to meet its growing demand for electricity. Of course, nobody knows exactly what the specific local effects of climate change will be, but scientists think it is likely to have a significant effect on rainfall.
According to Reuters, the aim of cutting Costa Rica’s net greenhouse gas emissions to zero by 2021 was announced by President Oscar Arias in June 2007. (2021 is Costa Rica's 200th birthday.) Costa Rican officials had previously announced plans to eliminate net greenhouse gas emissions by 2027.
Officials say the country will clean up its fossil fuel-fired power plants, promote hybrid vehicles, cut emissions from transport, farming and industry, and increase tree planting to balance its emissions. Government programs to promote reforestation have already put trees on 51 percent of the country, a 10 percent increase over the last decade.
Full NPR story can be found at http://www.npr.org/templates/story/story.php?storyId=18832252
Reuters story can be found at http://www.alertnet.org/thenews/newsdesk/N07289157.htm
Warm Winter in England
A short post today about recent mild winters in England. Far be it from me to relate this directly to climate change, but some people seem more swayed by anecdotal 'evidence' than the science.
On January 2nd, UPI announced that the mild winter was causing daffodils to bloom months earlier than usual. They also cited concern at Kew Botanical Gardens (just outside London) over changes in behavior observed since the 1980s in more than 75% of plant species whose biological patterns depend on temperature.
Now, well actually last week, Reuters reports similar concern over tortoises coming out of hibernation too early. Owners are advised to put them in the refrigerator, making sure you open it once a day to get some air in. See http://uk.reuters.com/article/newsOne/idUKL0682389820080206 for full story.
On January 2nd, UPI announced that the mild winter was causing daffodils to bloom months earlier than usual. They also cited concern at Kew Botanical Gardens (just outside London) over changes in behavior observed since the 1980s in more than 75% of plant species whose biological patterns depend on temperature.
Now, well actually last week, Reuters reports similar concern over tortoises coming out of hibernation too early. Owners are advised to put them in the refrigerator, making sure you open it once a day to get some air in. See http://uk.reuters.com/article/newsOne/idUKL0682389820080206 for full story.
Saturday, February 9, 2008
Beef about Climate Change
Here is something we can all do; eat less meat. Here is why.
Anthropogenic global warming skeptics are fond of pointing out that a lot of greenhouse gas emissions come from animals (in the form of methane) and suggest that this “natural” effect is not anthropogenic. But a lot of the animals involved are livestock for human consumption. An interesting article in the New York Times on January 27th points out that Americans alone eat nearly 10 billion animals a year. Worldwide we ate about 284 million tons in 2007, up about 300% from 1961, and this is expected to increase double by 2050.
My vegan sister has often told me how inefficient it is to eat meat, but I had not realized the extent of the problem. The NYT article has some interesting statistics:
· 6 ounces of beef produces 16 times the greenhouse gases as a vegetarian meal with the same number of calories.
· If each of us in the US were to cut our meat consumption by just 20% it would be equivalent to everyone switching from a Camry to a Prius.
· Producing 2.2 pounds of beef uses as much energy as burning a 100 watt bulb for nearly 20 days. (Not sure why they chose 2.2 pounds; maybe converted from a kilo. We eat about 4 pounds of meat, poultry, and fish each week.)
Then there is the problem of deforestation in places like Brazil to make room for cattle. 30% of the earth’s ice-free land is involved in livestock production.
For the full NYT article see http://www.nytimes.com/2008/01/27/weekinreview/27bittman.html?_r=1&scp=1&sq=meat+guzzler&st=nyt&oref=slogin.
Eating less meat need not be a hardship. Indeed it will make us healthier. I like my meat but it does not need to be the biggest thing on my plate. I’d rather have it in meals like stew or curry or in a meat sauce with pasta, where a pound of meat probably is good for about 6 meals. On the rare occasion that I have a steak I have the smallest filet (without bacon wrap) which is usually 6 ounces and more than enough. I reckon I eat about 60% of the national average; two Camry-to-Prius swaps, which makes me feel a bit better about my RX/7.
Anthropogenic global warming skeptics are fond of pointing out that a lot of greenhouse gas emissions come from animals (in the form of methane) and suggest that this “natural” effect is not anthropogenic. But a lot of the animals involved are livestock for human consumption. An interesting article in the New York Times on January 27th points out that Americans alone eat nearly 10 billion animals a year. Worldwide we ate about 284 million tons in 2007, up about 300% from 1961, and this is expected to increase double by 2050.
My vegan sister has often told me how inefficient it is to eat meat, but I had not realized the extent of the problem. The NYT article has some interesting statistics:
· 6 ounces of beef produces 16 times the greenhouse gases as a vegetarian meal with the same number of calories.
· If each of us in the US were to cut our meat consumption by just 20% it would be equivalent to everyone switching from a Camry to a Prius.
· Producing 2.2 pounds of beef uses as much energy as burning a 100 watt bulb for nearly 20 days. (Not sure why they chose 2.2 pounds; maybe converted from a kilo. We eat about 4 pounds of meat, poultry, and fish each week.)
Then there is the problem of deforestation in places like Brazil to make room for cattle. 30% of the earth’s ice-free land is involved in livestock production.
For the full NYT article see http://www.nytimes.com/2008/01/27/weekinreview/27bittman.html?_r=1&scp=1&sq=meat+guzzler&st=nyt&oref=slogin.
Eating less meat need not be a hardship. Indeed it will make us healthier. I like my meat but it does not need to be the biggest thing on my plate. I’d rather have it in meals like stew or curry or in a meat sauce with pasta, where a pound of meat probably is good for about 6 meals. On the rare occasion that I have a steak I have the smallest filet (without bacon wrap) which is usually 6 ounces and more than enough. I reckon I eat about 60% of the national average; two Camry-to-Prius swaps, which makes me feel a bit better about my RX/7.
Friday, February 8, 2008
Unintended Consequences
I don’t normally want to do more than one post per day, but this breaking news is also a perfect example of why we need accurate price signals.
It has long been known that corn-based ethanol is a very inefficient way of producing fuel, and that by raising the price of corn (and other foods which could be grown on the same ground) contributes to starvation in developing countries. (See for example http://www.truthout.org/issues_06/032207EB.shtml.) The motivation for corn ethanol was always political, to reward the farm lobby.
But yesterday there was news of two new studies published online in Science magazine which take all this into account and concludes that the overall effect of corn ethanol production is actually counterproductive, i.e. it adds about twice as much GHG to the atmosphere than using gasoline. The food taken out of the supply system for ethanol production needs to get replaced, and the way it gets replaced is largely by deforestation.
It has long been known that corn-based ethanol is a very inefficient way of producing fuel, and that by raising the price of corn (and other foods which could be grown on the same ground) contributes to starvation in developing countries. (See for example http://www.truthout.org/issues_06/032207EB.shtml.) The motivation for corn ethanol was always political, to reward the farm lobby.
But yesterday there was news of two new studies published online in Science magazine which take all this into account and concludes that the overall effect of corn ethanol production is actually counterproductive, i.e. it adds about twice as much GHG to the atmosphere than using gasoline. The food taken out of the supply system for ethanol production needs to get replaced, and the way it gets replaced is largely by deforestation.
Pricing Carbon -- Part Two
Last week I discussed the various ways carbon might be priced. This week I discuss what prices might emerge from these different pricing mechanisms and how this affects you and me through the prices we pay for gasoline and electricity.
Before we get into that, we need to talk about units. GHG emissions are normally measured in CO2 equivalents, but some people quote the price per tonne (a.k.a. metric ton) of carbon and some per tonne of carbon dioxide. 1 tonne of CO2 contains about 0.27 tonnes of carbon. Also, estimates may be in different currencies, so I have converted all to US$ per tonne of CO2. (“US$/tCO2”) I have used approximate exchange rates: 2 US$ to the pound sterling, 1.5 US$ to the euro, and 1.25 NZ$ to the US$.
The best-known cap-and-trade system is the European Union’s Emissions Trading Scheme (EU ETS) which started in 2005 on a trial basis and became fully operational at the beginning of 2008 when the Kyoto commitment period started. It covers industries like power generation, iron and steel, glass and cement which between them accounted for about 40% of the CO2 emissions of the EU’s 25 member states at the time. The EU is required by the Kyoto Protocol to cut its emissions by 8% from 1990 levels by 2012.
The idea was that permits would be issued to match the target amount of emissions, and these permits were to be given away rather than auctioned. Since the target was less than the previous level of emissions, affected industries would have to reduce their own emissions or buy permits from other companies who were better able to reduce theirs. A third option was to buy CERs, or Certified Emission Reductions, from third world countries. These CERs fund projects which reduce emissions in those countries and which would not be economic without the sale of CERs.
That was the theory anyway. Unfortunately, each member country got to decide how many permits to give away, and it soon became clear that too many had been issued. The result was that the price, which was expected to be over 40 euros per tonne, at one point plummeted to only 8 euros. This was expected to be corrected when the scheme became fully operational on January 1st 2008, but it has been somewhat derailed by the global credit crunch which has reduced expectations of energy demand. The price of carbon on the ETS is currently about 20 euros and for CERs about 15 euros.
Another approach is a carbon tax, but there are few if any examples. (The city of Boulder, Colorado does have a small carbon tax and there may be other examples. Clearly this needs to be done on a National – or better still, international – basis.) http://www.carbontax.org/ is a good resource for the carbon tax debate in the US. As for what the rate should be, this could be based upon an estimate of what is needed to achieve a certain emission target, or by estimating the actual cost of the damage. In the first case, we might expect the price to be commensurate with the market price in a cap-and-trade system. A 1997 report on a possible carbon tax in New Zealand considered tax rates starting in 2005 between about US$12/tCO2 and US$31/tCO2 (depending upon the target amounting of abatement) and gradually increasing to US$17/tCO2 to US$44/tCO2.
Estimates of the actual cost of climate change are not surprisingly all over the lot. A 2004 meta-study by Richard Tol analyzed 103 estimates from 28 published studies, yielding estimates from slightly negative (because some people benefit from climate change) to US$450/tCO2. The median value was US$4/tCO2 and Tol concludes that the cost – and therefore any tax -- is unlikely to exceed US$13.5tCO2. (All these values converted from US$/tC.)
The Stern Review, commissioned by the UK government and issued in 2006, is perhaps the most comprehensive attempt to estimate the cost of unabated climate change. It came up with a higher value, largely because of the use of a lower social discount rate and equity weighting as discussed last week. It estimated the cost of doing nothing to be about US$85/tCO2, while the cost of reducing emissions was only about US$25/tCO2. (For the key findings, see http://politics.guardian.co.uk/economics/story/0,,1935208,00.html.) In 2007, The UK government’s environmental agency, DEFRA, adopted a social cost of US$50/tCO2 to be used in all cost-benefit analyses of public projects.
So, what does all this mean? It looks like a carbon tax would likely be in the range of US$10/tCO2 to US$50/tCO2.
A gallon of gasoline generates about 20 pounds of carbon dioxide. A tonne is about 2200 pounds, so that is less than one hundredth of a tonne. The tax would therefore amount to only about 10 to 50 cents per gallon. With gasoline at $3, that would be an increase of between 3% and 17%.
For electricity generated from coal, the tax would amount to between 1 and 5 cents per kWh. For natural gas it can be as little as half that, though this depends more on the upstream cost of producing the gas. I currently pay about 16 cents per kWh, so that would be about 6% to 30% on my electricity bill. Note that the proportional effect on the electricity bill is much greater than on gasoline. In absolute terms, the difference could be even greater.
Last year my wife and I spent $3000 on electricity (down 25% on two years ago due to CFLs and other measures I will blog about at a later date) and maybe $2500 on gasoline for two cars. So, the total cost of a carbon tax (or the equivalent) for these two items would be somewhere in the range of $250 to $1300 per year. My feeling about this is that it is that it needs to be nearer the top of this range to have a serious impact on behavior.
There will also be costs for manufacturing, transport, etc. for pretty much everything we buy, which of course is the whole idea. We need these price signals to guide our purchase decisions. For example, given that I do relatively few miles, right now I actually do not know whether it would improve my carbon footprint if I were to buy a new and more efficient replacement for my 16-year-old RX/7. (Tomorrow I will post about how the amount of meat we eat affects our carbon footprint more than the cars we drive; again, we need the cost of this represented in the price of the meat.)
Before we get into that, we need to talk about units. GHG emissions are normally measured in CO2 equivalents, but some people quote the price per tonne (a.k.a. metric ton) of carbon and some per tonne of carbon dioxide. 1 tonne of CO2 contains about 0.27 tonnes of carbon. Also, estimates may be in different currencies, so I have converted all to US$ per tonne of CO2. (“US$/tCO2”) I have used approximate exchange rates: 2 US$ to the pound sterling, 1.5 US$ to the euro, and 1.25 NZ$ to the US$.
The best-known cap-and-trade system is the European Union’s Emissions Trading Scheme (EU ETS) which started in 2005 on a trial basis and became fully operational at the beginning of 2008 when the Kyoto commitment period started. It covers industries like power generation, iron and steel, glass and cement which between them accounted for about 40% of the CO2 emissions of the EU’s 25 member states at the time. The EU is required by the Kyoto Protocol to cut its emissions by 8% from 1990 levels by 2012.
The idea was that permits would be issued to match the target amount of emissions, and these permits were to be given away rather than auctioned. Since the target was less than the previous level of emissions, affected industries would have to reduce their own emissions or buy permits from other companies who were better able to reduce theirs. A third option was to buy CERs, or Certified Emission Reductions, from third world countries. These CERs fund projects which reduce emissions in those countries and which would not be economic without the sale of CERs.
That was the theory anyway. Unfortunately, each member country got to decide how many permits to give away, and it soon became clear that too many had been issued. The result was that the price, which was expected to be over 40 euros per tonne, at one point plummeted to only 8 euros. This was expected to be corrected when the scheme became fully operational on January 1st 2008, but it has been somewhat derailed by the global credit crunch which has reduced expectations of energy demand. The price of carbon on the ETS is currently about 20 euros and for CERs about 15 euros.
Another approach is a carbon tax, but there are few if any examples. (The city of Boulder, Colorado does have a small carbon tax and there may be other examples. Clearly this needs to be done on a National – or better still, international – basis.) http://www.carbontax.org/ is a good resource for the carbon tax debate in the US. As for what the rate should be, this could be based upon an estimate of what is needed to achieve a certain emission target, or by estimating the actual cost of the damage. In the first case, we might expect the price to be commensurate with the market price in a cap-and-trade system. A 1997 report on a possible carbon tax in New Zealand considered tax rates starting in 2005 between about US$12/tCO2 and US$31/tCO2 (depending upon the target amounting of abatement) and gradually increasing to US$17/tCO2 to US$44/tCO2.
Estimates of the actual cost of climate change are not surprisingly all over the lot. A 2004 meta-study by Richard Tol analyzed 103 estimates from 28 published studies, yielding estimates from slightly negative (because some people benefit from climate change) to US$450/tCO2. The median value was US$4/tCO2 and Tol concludes that the cost – and therefore any tax -- is unlikely to exceed US$13.5tCO2. (All these values converted from US$/tC.)
The Stern Review, commissioned by the UK government and issued in 2006, is perhaps the most comprehensive attempt to estimate the cost of unabated climate change. It came up with a higher value, largely because of the use of a lower social discount rate and equity weighting as discussed last week. It estimated the cost of doing nothing to be about US$85/tCO2, while the cost of reducing emissions was only about US$25/tCO2. (For the key findings, see http://politics.guardian.co.uk/economics/story/0,,1935208,00.html.) In 2007, The UK government’s environmental agency, DEFRA, adopted a social cost of US$50/tCO2 to be used in all cost-benefit analyses of public projects.
So, what does all this mean? It looks like a carbon tax would likely be in the range of US$10/tCO2 to US$50/tCO2.
A gallon of gasoline generates about 20 pounds of carbon dioxide. A tonne is about 2200 pounds, so that is less than one hundredth of a tonne. The tax would therefore amount to only about 10 to 50 cents per gallon. With gasoline at $3, that would be an increase of between 3% and 17%.
For electricity generated from coal, the tax would amount to between 1 and 5 cents per kWh. For natural gas it can be as little as half that, though this depends more on the upstream cost of producing the gas. I currently pay about 16 cents per kWh, so that would be about 6% to 30% on my electricity bill. Note that the proportional effect on the electricity bill is much greater than on gasoline. In absolute terms, the difference could be even greater.
Last year my wife and I spent $3000 on electricity (down 25% on two years ago due to CFLs and other measures I will blog about at a later date) and maybe $2500 on gasoline for two cars. So, the total cost of a carbon tax (or the equivalent) for these two items would be somewhere in the range of $250 to $1300 per year. My feeling about this is that it is that it needs to be nearer the top of this range to have a serious impact on behavior.
There will also be costs for manufacturing, transport, etc. for pretty much everything we buy, which of course is the whole idea. We need these price signals to guide our purchase decisions. For example, given that I do relatively few miles, right now I actually do not know whether it would improve my carbon footprint if I were to buy a new and more efficient replacement for my 16-year-old RX/7. (Tomorrow I will post about how the amount of meat we eat affects our carbon footprint more than the cars we drive; again, we need the cost of this represented in the price of the meat.)
Thursday, February 7, 2008
Banks Adopt “The Carbon Principles”
Reuters reported the other day that Citigroup, JPMorgan Chase and Morgan Stanley have adopted “The Carbon Principles,” climate change guidelines for advisors and lenders to power companies in the U.S. The banks say the move is in anticipation of the government capping GHG emissions in the coming years and that the biggest motivation for it was financial. The new standards are the result of nine months of negotiations among the banks, environmental groups, and large utilities.
The principles were developed in consultation with power companies American Electric Power, CMS Energy, DTE Energy, NRG Energy, PSEG, Sempra and Southern Company. Environmental Defense and the Natural Resources Defense Council were also involved. The standards do not preclude bank financing for building traditional coal-burning power plants, but they do set up a more rigorous evaluation process.
The banks are open to financing coal plants that capture their GHG emissions and shoot them underground, but they say they will encourage renewable energy before coal and will help utilities push for government policies that make renewable energy and efficiency more practical.
“A rational set of carbon principles to help guide energy investment strategy is vital to our nation’s energy and economic future,” said Michael G. Morris, Chairman, president and CEO of American Electric Power, “Recognizing that energy efficiency, renewables, cleaner fossil technologies and other diverse solutions all have significant roles in addressing climate challenges while maintaining economic and energy security establishes a framework for making the best decisions regarding our nation’s energy future.”
Here are the principles as written by the banks:
Energy efficiency: An effective way to limit CO2 emissions is to not produce them. The signatory financial institutions will encourage clients to invest in cost-effective demand reduction, taking into consideration the value of avoided CO2 emissions. We will also encourage regulatory and legislative changes that increase efficiency in electricity consumption including the removal of barriers to investment in cost-effective demand reduction. The institutions will consider demand reduction caused by increased energy efficiency (or other means) as part of the Enhanced Diligence Process and assess its impact on proposed financings of certain new fossil fuel generation.
Renewable and low carbon distributed energy technologies: Renewable energy and low carbon distributed energy technologies hold considerable promise for meeting the electricity needs of the US while also leveraging American technology and creating jobs. We will encourage clients to invest in cost-effective renewables and distributed technologies, taking into consideration the value of avoided CO2 emissions. We will also encourage legislative and regulatory changes that remove barriers to, and promote such investments (including related investments in infrastructure and equipment needed to support the connection of renewable sources to the system). We will consider production increases from renewable and low carbon generation as part of the Enhanced Diligence process and assess their impact on proposed financings of certain new fossil fuel generation.
Conventional and advanced generation: In addition to cost effective energy efficiency, renewables and low carbon distributed generation, investments in conventional or advanced generating facilities will be needed to supply reliable electric power to the US market. This may include power from natural gas, coal and nuclear technologies. Due to evolving climate policy, investing in CO2-emitting fossil fuel generation entails uncertain financial, regulatory and certain environmental liability risks. It is the purpose of the Enhanced Diligence process to assess and reflect these risks in the financing considerations for certain fossil fuel generation. We will encourage regulatory and legislative changes that facilitate carbon capture and storage (CCS) to further reduce CO2 emissions from the electric sector.
The principles were developed in consultation with power companies American Electric Power, CMS Energy, DTE Energy, NRG Energy, PSEG, Sempra and Southern Company. Environmental Defense and the Natural Resources Defense Council were also involved. The standards do not preclude bank financing for building traditional coal-burning power plants, but they do set up a more rigorous evaluation process.
The banks are open to financing coal plants that capture their GHG emissions and shoot them underground, but they say they will encourage renewable energy before coal and will help utilities push for government policies that make renewable energy and efficiency more practical.
“A rational set of carbon principles to help guide energy investment strategy is vital to our nation’s energy and economic future,” said Michael G. Morris, Chairman, president and CEO of American Electric Power, “Recognizing that energy efficiency, renewables, cleaner fossil technologies and other diverse solutions all have significant roles in addressing climate challenges while maintaining economic and energy security establishes a framework for making the best decisions regarding our nation’s energy future.”
Here are the principles as written by the banks:
Energy efficiency: An effective way to limit CO2 emissions is to not produce them. The signatory financial institutions will encourage clients to invest in cost-effective demand reduction, taking into consideration the value of avoided CO2 emissions. We will also encourage regulatory and legislative changes that increase efficiency in electricity consumption including the removal of barriers to investment in cost-effective demand reduction. The institutions will consider demand reduction caused by increased energy efficiency (or other means) as part of the Enhanced Diligence Process and assess its impact on proposed financings of certain new fossil fuel generation.
Renewable and low carbon distributed energy technologies: Renewable energy and low carbon distributed energy technologies hold considerable promise for meeting the electricity needs of the US while also leveraging American technology and creating jobs. We will encourage clients to invest in cost-effective renewables and distributed technologies, taking into consideration the value of avoided CO2 emissions. We will also encourage legislative and regulatory changes that remove barriers to, and promote such investments (including related investments in infrastructure and equipment needed to support the connection of renewable sources to the system). We will consider production increases from renewable and low carbon generation as part of the Enhanced Diligence process and assess their impact on proposed financings of certain new fossil fuel generation.
Conventional and advanced generation: In addition to cost effective energy efficiency, renewables and low carbon distributed generation, investments in conventional or advanced generating facilities will be needed to supply reliable electric power to the US market. This may include power from natural gas, coal and nuclear technologies. Due to evolving climate policy, investing in CO2-emitting fossil fuel generation entails uncertain financial, regulatory and certain environmental liability risks. It is the purpose of the Enhanced Diligence process to assess and reflect these risks in the financing considerations for certain fossil fuel generation. We will encourage regulatory and legislative changes that facilitate carbon capture and storage (CCS) to further reduce CO2 emissions from the electric sector.
Wednesday, February 6, 2008
Victory for the Planet
I have just posted today's installment of what I plan to make a regular Wednesday car post, but I need to say something about the Super Tuesday result. We can now be sure that the next president will be serious about climate change. I always thought that McCain was the only Republican with a shot at winning the general election. If he does so, his conservative credentials may actually make it easier for him to deliver than it would be for a Democrat, rather like Nixon going to China. Maybe John Adams will write an opera about it one day!
Two Clean Supercars?
Wednesday is going to be car day on the blog, and it’s time for a confession. I am a car guy, which does not sit well with concern for climate change but that’s the way it is. About 6 times a year I get into a vintage MGB race car and race other enthusiasts around a road course, burning up maybe 15 gallons of high octane fuel. What’s more, my daily driver is a Mazda RX7 which I bought new 16 years ago and which gets about 17mpg.
My excuse is that I do very few miles, and if I sold it the new owner would probably do more. Also, at least I have not incurred the emissions associated with the manufacture of a new car in those 16 years. I never expect to sell the RX7, or the 1969 Jaguar XKE with which it shares a garage, but I am on the waiting list for a new Tesla electric car to be delivered in 2009.
I was going to save this until a later blog, but last week was a milestone for Tesla when they “delivered” their first production car, to their own Chairman. This may not sound much, but it demonstrates that Tesla has met all regulatory requirements for the importation and sale of the Tesla Roadster as a fully certified production car. (The Tesla is built by Lotus in England on a modified Elise platform.) Tesla also issued a press release to say that series production would start March 17th. See http://www.teslamotors.com/media/press_room.php?id=803.
The Tesla may not strictly be a super car, being rather light on top speed, but both its price ($98,000) and its acceleration (0 to 60 in less than 4 seconds) put it at least close. Autoweek ran a road test last week, and generally liked it. One small complaint was the lack of toe-in, done to reduce rolling resistance, which made it wander over uneven payment. Another slight disappointment was the range. The company claims 267 under ideal conditions, while the EPA says 221. In hard driving, and starting with the gauge showing a 95% charge, Autoweek got only 93 miles before the gauge showed 7% and the car automatically switched to “get you home” mode. This latter restricts power and moved the gauge up to 21%. (Not quite sure of the logic of this; if the batteries are 7% charged, that is surely true however much power one is drawing. It might be better to show estimated miles remaining in current driving style.) Like all electric cars, it really needs better battery technology but this is coming. I just hope it can be retrofitted.
Tesla have sold all their 2008 production, and I shall be waiting to see the reaction from early owners. If it does not pan out I might be in the market for the diesel version of the Audi R8, due for release in 2009. While the gasoline version is available now, the Audi R8 V-12 TDI is currently just a concept. The show car’s 6 liter turbocharged V12 produces 500 bhp and no less than 738 lb-ft of torque, enough to propel it to 62mph in 4.2 seconds and on to a 186mph top speed. This is definitely supercar territory, yet Audi claims 23 mpg. (This may not seem exactly green, but compare for example the Lamborghini Gallardo, built on the same platform as the R8, at 11 city, 17 highway.)
The production Audi R8 TDI is expected to use the 4.2 liter V8 diesel from the Q7 SUV (where produces 561 lb-ft, available from 1800 rpm) and to return about 27mpg. (The gasoline R8 is EPA rated at 13 city, 20 highway.) Getting my mileage up from 17 to 27 will save over 2 gallons per 100 miles, the same as if I replaced a 24 mpg mid-size car with a 50 mpg hybrid. (See my post on January 31st.)And I still promise not to do too many miles; I will after all need to try to preserve its resale value.
Yes, I know these cars are expensive but if one of these cars lasts me 16 years like the Mazda has it will probably be my last. I hope to post on more mundane electric car news next Wednesday.
My excuse is that I do very few miles, and if I sold it the new owner would probably do more. Also, at least I have not incurred the emissions associated with the manufacture of a new car in those 16 years. I never expect to sell the RX7, or the 1969 Jaguar XKE with which it shares a garage, but I am on the waiting list for a new Tesla electric car to be delivered in 2009.
I was going to save this until a later blog, but last week was a milestone for Tesla when they “delivered” their first production car, to their own Chairman. This may not sound much, but it demonstrates that Tesla has met all regulatory requirements for the importation and sale of the Tesla Roadster as a fully certified production car. (The Tesla is built by Lotus in England on a modified Elise platform.) Tesla also issued a press release to say that series production would start March 17th. See http://www.teslamotors.com/media/press_room.php?id=803.
The Tesla may not strictly be a super car, being rather light on top speed, but both its price ($98,000) and its acceleration (0 to 60 in less than 4 seconds) put it at least close. Autoweek ran a road test last week, and generally liked it. One small complaint was the lack of toe-in, done to reduce rolling resistance, which made it wander over uneven payment. Another slight disappointment was the range. The company claims 267 under ideal conditions, while the EPA says 221. In hard driving, and starting with the gauge showing a 95% charge, Autoweek got only 93 miles before the gauge showed 7% and the car automatically switched to “get you home” mode. This latter restricts power and moved the gauge up to 21%. (Not quite sure of the logic of this; if the batteries are 7% charged, that is surely true however much power one is drawing. It might be better to show estimated miles remaining in current driving style.) Like all electric cars, it really needs better battery technology but this is coming. I just hope it can be retrofitted.
Tesla have sold all their 2008 production, and I shall be waiting to see the reaction from early owners. If it does not pan out I might be in the market for the diesel version of the Audi R8, due for release in 2009. While the gasoline version is available now, the Audi R8 V-12 TDI is currently just a concept. The show car’s 6 liter turbocharged V12 produces 500 bhp and no less than 738 lb-ft of torque, enough to propel it to 62mph in 4.2 seconds and on to a 186mph top speed. This is definitely supercar territory, yet Audi claims 23 mpg. (This may not seem exactly green, but compare for example the Lamborghini Gallardo, built on the same platform as the R8, at 11 city, 17 highway.)
The production Audi R8 TDI is expected to use the 4.2 liter V8 diesel from the Q7 SUV (where produces 561 lb-ft, available from 1800 rpm) and to return about 27mpg. (The gasoline R8 is EPA rated at 13 city, 20 highway.) Getting my mileage up from 17 to 27 will save over 2 gallons per 100 miles, the same as if I replaced a 24 mpg mid-size car with a 50 mpg hybrid. (See my post on January 31st.)And I still promise not to do too many miles; I will after all need to try to preserve its resale value.
Yes, I know these cars are expensive but if one of these cars lasts me 16 years like the Mazda has it will probably be my last. I hope to post on more mundane electric car news next Wednesday.
Tuesday, February 5, 2008
Nanotechnology and Climate Change
If Dustin Hoffman’s film the Graduate was set today, the one word Mr. McGuire says to Ben would be “nanotechnology” rather than “plastics.” Nanotechnology has potential applications in fields as varied as cancer treatment and new materials for aircraft manufacture, as well as a number of interesting possibilities for combating climate change. This is a quick review of some of these possibilities, following a nanotechnology conference I attended a week or so ago. I will try to come back to some of them in more detail in later postings.
Nanotechnology is the science of very small particles, from 1 to 10 nanometers, a nanometer being an American billionth (10 to the power -9) of a meter. These have interesting properties because this is small enough for quantum mechanical effects to emerge and also because the ratio of surface area to volume gets greater as the size of the particles gets smaller. Both these aspects of nanotechnology present exciting possibilities in the fight against climate change.
The first four applications below relate to two major problems with renewable energy: since renewable sources of electricity like wind and sun tend not to be constantly available, we need an efficient way to store the electricity; and since they may also not be available in the place where they are needed, we also need to be able to transmit the electricity efficiently.
The high surface area to volume ratio raises the possibility of creating “ultracapacitors” to replace chemical batteries. A capacitor is just a couple of charged conductors separated by an insulator (or “dielectric”). Connecting the two plates completes a circuit, discharging the plates and releasing the stored energy. The amount of energy which can be stored depends upon the surface area, the distance between the plates, and the type of dielectric. Conventional capacitors are used in electronic circuitry for example, but cannot hold a significant amount of energy like a battery of a similar size can. This all changes at the nano level because of the high surface area to volume ratio. Work at MIT's Laboratory for Electromagnetic and Electronic Systems (LEES) has demonstrated the use of vertically aligned single-wall carbon nanotubes.
[Nanotechnology seems to be closer than I thought! After I had prepared this post, I came across an article in this week's Economist about a prototype hybrid which uses ultracapacitors for regenerative braking. The car was exhibited at the Detroit Auto Show by AFS Trinity and is based upon a Sauturn Vue. I then found it on the web. See for example http://business2-cnet.com.com/8300-10784_3-7-0.html?categoryId=2047.]
Nanotechnology also has applications in chemical batteries. For example, Toshiba has a prototype lithium-iron battery where the surface area of the lithium is dramatically increased and the battery can be safely charged in minutes. This may have application for electric cars, making it feasible to recharge at a roadside station like we currently fill up with gas. (Though a lower tech solution is just to switch out the battery as Israel is planning. I hope to post on electric car news on the next two Wednesdays.) Also, Stanford University announced a new process that may allow lithium-ion batteries, using silicon instead of carbon as the anode, to store 10 times as much energy as current batteries.
Instead of storing energy in the form of electricity or chemically in a battery, there is the possibility of storing hydrogen and using this to generate electricity in a fuel cell. Fuel cells rely on catalysts, and the high area to volume ratio of nanomaterials greatly increases the efficiency of fuel cells.
High Temperature Superconductivity (HTSC) offers the possibility of loss-free transmission of electricity over long distances. Current power grids lose about 20% of the energy, so this could be a huge benefit even with the present generation system. Imagine however the possibility of being able to transmit power to Hamburg from a solar power station in the Sahara! Superconductivity was first observed at temperatures close to absolute zero. Later, materials were found which exhibited HTSC, but “high temperature” is relative; we were still talking about -200 degrees centigrade. A cable made of carbon nanotubes exhibits superconductivity at normal temperatures.
HTSC also offers the possibility of better electric motors. Making the windings superconductive would not only eliminate the losses, making them more energy-efficient, but because there is no heat to dissipate the motors can also be made smaller and lighter.
Quantum dots are semiconductor nanostructures which promise much cheaper and more efficient photovoltaic materials. (Current solar panels typically convert only about 15% of the sun’s energy into electricity.)
The extremely high strength of some nanomaterials, including carbon nanotubes, has obvious advantages in reducing the weight, and hence energy efficiency, of cars, planes, etc. One thing which might not be so obvious is that it will enable us to make flywheels which will run at much higher speeds without disintegrating, which means that for any given size they can store more energy. One possible application of this is in regenerative braking. Current hybrids use a generator to convert kinetic energy recovered from braking into electricity which is stored in the battery, but the energy could also be stored kinetically in a flywheel. The Federation International de l’Automobile (FIA) has recently endorsed the use of such a Kinetic Energy Recovery System (KERS) for Formula 1 racing in 2009. I will probably post more on this.
Finally, GE has announced plans to produce a more efficient incandescent light bulb based on photonic band gap technology, which utilizes a nanostructured mix of materials of different refractive index materials to concentrate the radiation into the visible spectrum. Compared to CFLs this technology promises lower prices, familiar shape and size, and no disposal problems.
Nanotechnology is the science of very small particles, from 1 to 10 nanometers, a nanometer being an American billionth (10 to the power -9) of a meter. These have interesting properties because this is small enough for quantum mechanical effects to emerge and also because the ratio of surface area to volume gets greater as the size of the particles gets smaller. Both these aspects of nanotechnology present exciting possibilities in the fight against climate change.
The first four applications below relate to two major problems with renewable energy: since renewable sources of electricity like wind and sun tend not to be constantly available, we need an efficient way to store the electricity; and since they may also not be available in the place where they are needed, we also need to be able to transmit the electricity efficiently.
The high surface area to volume ratio raises the possibility of creating “ultracapacitors” to replace chemical batteries. A capacitor is just a couple of charged conductors separated by an insulator (or “dielectric”). Connecting the two plates completes a circuit, discharging the plates and releasing the stored energy. The amount of energy which can be stored depends upon the surface area, the distance between the plates, and the type of dielectric. Conventional capacitors are used in electronic circuitry for example, but cannot hold a significant amount of energy like a battery of a similar size can. This all changes at the nano level because of the high surface area to volume ratio. Work at MIT's Laboratory for Electromagnetic and Electronic Systems (LEES) has demonstrated the use of vertically aligned single-wall carbon nanotubes.
[Nanotechnology seems to be closer than I thought! After I had prepared this post, I came across an article in this week's Economist about a prototype hybrid which uses ultracapacitors for regenerative braking. The car was exhibited at the Detroit Auto Show by AFS Trinity and is based upon a Sauturn Vue. I then found it on the web. See for example http://business2-cnet.com.com/8300-10784_3-7-0.html?categoryId=2047.]
Nanotechnology also has applications in chemical batteries. For example, Toshiba has a prototype lithium-iron battery where the surface area of the lithium is dramatically increased and the battery can be safely charged in minutes. This may have application for electric cars, making it feasible to recharge at a roadside station like we currently fill up with gas. (Though a lower tech solution is just to switch out the battery as Israel is planning. I hope to post on electric car news on the next two Wednesdays.) Also, Stanford University announced a new process that may allow lithium-ion batteries, using silicon instead of carbon as the anode, to store 10 times as much energy as current batteries.
Instead of storing energy in the form of electricity or chemically in a battery, there is the possibility of storing hydrogen and using this to generate electricity in a fuel cell. Fuel cells rely on catalysts, and the high area to volume ratio of nanomaterials greatly increases the efficiency of fuel cells.
High Temperature Superconductivity (HTSC) offers the possibility of loss-free transmission of electricity over long distances. Current power grids lose about 20% of the energy, so this could be a huge benefit even with the present generation system. Imagine however the possibility of being able to transmit power to Hamburg from a solar power station in the Sahara! Superconductivity was first observed at temperatures close to absolute zero. Later, materials were found which exhibited HTSC, but “high temperature” is relative; we were still talking about -200 degrees centigrade. A cable made of carbon nanotubes exhibits superconductivity at normal temperatures.
HTSC also offers the possibility of better electric motors. Making the windings superconductive would not only eliminate the losses, making them more energy-efficient, but because there is no heat to dissipate the motors can also be made smaller and lighter.
Quantum dots are semiconductor nanostructures which promise much cheaper and more efficient photovoltaic materials. (Current solar panels typically convert only about 15% of the sun’s energy into electricity.)
The extremely high strength of some nanomaterials, including carbon nanotubes, has obvious advantages in reducing the weight, and hence energy efficiency, of cars, planes, etc. One thing which might not be so obvious is that it will enable us to make flywheels which will run at much higher speeds without disintegrating, which means that for any given size they can store more energy. One possible application of this is in regenerative braking. Current hybrids use a generator to convert kinetic energy recovered from braking into electricity which is stored in the battery, but the energy could also be stored kinetically in a flywheel. The Federation International de l’Automobile (FIA) has recently endorsed the use of such a Kinetic Energy Recovery System (KERS) for Formula 1 racing in 2009. I will probably post more on this.
Finally, GE has announced plans to produce a more efficient incandescent light bulb based on photonic band gap technology, which utilizes a nanostructured mix of materials of different refractive index materials to concentrate the radiation into the visible spectrum. Compared to CFLs this technology promises lower prices, familiar shape and size, and no disposal problems.
Monday, February 4, 2008
Clean Aviation?: news from Airbus, Boeing, and DARPA
Aviation is responsible for only a small percentage of global greenhouse gas (GHG) emissions, but it is a fast growing sector and represents a large part of the carbon footprint of frequent travelers like myself. Some also think that the effects may be larger due to the high altitude at which emissions are released. It has also been thought that GHG from aviation is a hard nut to crack because we lack suitable alternative fuels, but three recent stories give hope.
The first story concerns Airbus, which flew an A380 from Bristol to Toulouse with just one of its four engines running on GTL. GTL stands for “gas to liquid” and is a synthetic fuel made from natural gas. The GHG benefit compared with conventional jet fuel (kerosene) is not great, but the flight is meant to be a step towards being able to use second-generation biofuels. Shell and Rolls Royce are working with Airbus, and Qatar Airways could be the first airline to use the fuel on commercial flights.
Meanwhile Virgin Atlantic, working with Boeing and GE, plans to fly from London to Amsterdam using biofuel in all four engines, with a similar flight being planned by Air New Zealand.
But the most interesting news I have seen lately was something I heard at a conference a week or so ago. Apparently the US Defense Advanced Research Project Agency (DARPA) has asked aerospace companies to bid on a new aerial surveillance project called VULTURE (for Very-high altitude, Ultra-endurance, Loitering Theater Unmanned Reconnaissance Element). A bidders meeting is scheduled for June 7th. The interesting thing is that it needs to be able to carry a 1000-lound payload and to stay up for five years! At first I was disinclined to believe it, so a Googled and found this: http://www.space.com/businesstechnology/070607_uavs3.html.
It is supposed that VULTURE will have to be solar powered, though that is not a requirement. I have not seen anything on how long the project might take, and of course any application to commercial aircraft would be much further away, but there is plenty of sun up there above the clouds and there is enormous scope for improvement in photovoltaic efficiency.
The first story concerns Airbus, which flew an A380 from Bristol to Toulouse with just one of its four engines running on GTL. GTL stands for “gas to liquid” and is a synthetic fuel made from natural gas. The GHG benefit compared with conventional jet fuel (kerosene) is not great, but the flight is meant to be a step towards being able to use second-generation biofuels. Shell and Rolls Royce are working with Airbus, and Qatar Airways could be the first airline to use the fuel on commercial flights.
Meanwhile Virgin Atlantic, working with Boeing and GE, plans to fly from London to Amsterdam using biofuel in all four engines, with a similar flight being planned by Air New Zealand.
But the most interesting news I have seen lately was something I heard at a conference a week or so ago. Apparently the US Defense Advanced Research Project Agency (DARPA) has asked aerospace companies to bid on a new aerial surveillance project called VULTURE (for Very-high altitude, Ultra-endurance, Loitering Theater Unmanned Reconnaissance Element). A bidders meeting is scheduled for June 7th. The interesting thing is that it needs to be able to carry a 1000-lound payload and to stay up for five years! At first I was disinclined to believe it, so a Googled and found this: http://www.space.com/businesstechnology/070607_uavs3.html.
It is supposed that VULTURE will have to be solar powered, though that is not a requirement. I have not seen anything on how long the project might take, and of course any application to commercial aircraft would be much further away, but there is plenty of sun up there above the clouds and there is enormous scope for improvement in photovoltaic efficiency.
Saturday, February 2, 2008
CFL Experiences
[I am modifying the first paragraph of this post on 2/17/08 to say "up to 70" rather than "about 70" lumens per watt, to reflect the fact that 70 LPW is at the top end of the range of CFL performance. Also see this report on two tests of CFLs, which also confirms my personal experience of the amount of variation between CFLs, drop-off in brightness ovefr time, and failure rates. www.rightlight6.org/english/proceedings/Session_8/International_Lamp_Testing_Programs/s08-3p030granda.pdf]
Like some political debate, conventional incandescent light bulbs produce more heat than light. In fact, only about 2% of the energy they use is emitted as light, which is why lighting is seen as “low hanging fruit” for energy conservation and why the US and other governments have legislated to phase these bulbs out. (Actually, the legislation does not ban incandescent bulbs explicitly, but mandates a minimum efficiency of about 20 lumens per watt. Current incandescents typically produce less than 15, while compact fluorescent lamps (CFLs) easily beat the proposed standard at up to 70 lumens per watt.) There are other alternatives, and in a later posting I hope to discuss the physics behind them, but today I am going to report my own experiences using CFLs and hope to get feedback. (In fact, I plan to concentrate my Saturday postings on the practical aspects of what individuals can do to reduce climate change.)
When I set out to write this, I had envisioned a rant about how bad CFLs were, but when I looked around the house I was surprised how many such bulbs I have and how unobtrusive most of them are. I did not count the bulbs, but I did count 10 different types from 5 brands. So, not all CFLs are created equal. There are however a few general points. Firstly, some people do not like the color of the light. It tends to be slightly bluer, though this “color temperature” varies from bulb to bulb. It is more like natural daylight, and I actually prefer it. Secondly, while they are meant to come on instantly, there is often a noticeable delay and/or a longer warm-up period during which they are relatively dim. Finally, some helicals are larger than conventional bulbs, and don't always fit into table lamps.
Most of the bulbs in the house come from Bright Effects, which I think belongs to Lowes. One is a regular 15W bulb (LBP16AM2) which is fine. Most are large 18W floodlights (LBP18R402) in can fixtures, and have also operated flawlessly so far (getting on for a year). However, I bought four smaller 15W floods (LPB15R30M2) which were mounted in more confining fixtures and which failed within 3 to 6 months. Lowes refused to replace them or refund the money, saying that they do not refund on light bubs. I think they need to rethink this policy for CFLs.
I have heard of other people with similar problems, and the problem may be that the bulbs do not work well when confined in can fixtures. Even CFLs produce quite a bit of heat, and the problem may be that the electronic ballast gets fried.
I also have four GreenLite dimmable floodlights, also mounted in can fixtures. So far none have failed, but one is temperamental. Sometimes it comes on for a second and goes off again and I have to “reboot” – switch off and wait a few seconds, or maybe play with the dimmer switch. I don’t dim them often, but I have found that they flicker when dimmed low. They are also among the worst for taking time to get up to full brightness.
Another interesting bulb is a 3-way bulb from Sylvania -- 12/19/29 watts which is equivalent to about 50/85/130 for an incandescent – and I have no complaints. I also have a dozen 9 watt Sylvania decorative globes in the bathroom which have worked flawlessly, with negligible delay in startup and close to full brightness immediately. I have one 19 watt helical Sylvania, however, which has a definite delay (maybe half a second of so) and also seems dimmer now than it was when I first installed it.
I also have a couple of GE helicals – 10W and 26W – which have been very satisfactory.
Finally, I have a 15W Lightwiz helical which was still in its box. I tried it out yesterday and it seemed to work well, but I have not tested it over time.
(I also have one very expensive LED light, which is very blue and so dim that if there is any other ambient light it is hard to see whether it is on or off without looking directly into it!)
All in all I think it is well worth making the switch to CFL, at least if you live in a hot climate; I live in Houston where we use A/C most of the year so producing less heat gives a double benefit and in my case it has contributed to a 25% drop in my electricity bills. (There is no real advantage at times when you are heating the space anyway, especially if heating with electricity.) The biggest problem seems to be failure of the ballast when confined in a can fixture, but some cans seem to provide more space than others. I should perhaps add the obvious fact that this is all highly unscientific and anecdotal. I welcome comments from others on their experiences with CFLs.
Like some political debate, conventional incandescent light bulbs produce more heat than light. In fact, only about 2% of the energy they use is emitted as light, which is why lighting is seen as “low hanging fruit” for energy conservation and why the US and other governments have legislated to phase these bulbs out. (Actually, the legislation does not ban incandescent bulbs explicitly, but mandates a minimum efficiency of about 20 lumens per watt. Current incandescents typically produce less than 15, while compact fluorescent lamps (CFLs) easily beat the proposed standard at up to 70 lumens per watt.) There are other alternatives, and in a later posting I hope to discuss the physics behind them, but today I am going to report my own experiences using CFLs and hope to get feedback. (In fact, I plan to concentrate my Saturday postings on the practical aspects of what individuals can do to reduce climate change.)
When I set out to write this, I had envisioned a rant about how bad CFLs were, but when I looked around the house I was surprised how many such bulbs I have and how unobtrusive most of them are. I did not count the bulbs, but I did count 10 different types from 5 brands. So, not all CFLs are created equal. There are however a few general points. Firstly, some people do not like the color of the light. It tends to be slightly bluer, though this “color temperature” varies from bulb to bulb. It is more like natural daylight, and I actually prefer it. Secondly, while they are meant to come on instantly, there is often a noticeable delay and/or a longer warm-up period during which they are relatively dim. Finally, some helicals are larger than conventional bulbs, and don't always fit into table lamps.
Most of the bulbs in the house come from Bright Effects, which I think belongs to Lowes. One is a regular 15W bulb (LBP16AM2) which is fine. Most are large 18W floodlights (LBP18R402) in can fixtures, and have also operated flawlessly so far (getting on for a year). However, I bought four smaller 15W floods (LPB15R30M2) which were mounted in more confining fixtures and which failed within 3 to 6 months. Lowes refused to replace them or refund the money, saying that they do not refund on light bubs. I think they need to rethink this policy for CFLs.
I have heard of other people with similar problems, and the problem may be that the bulbs do not work well when confined in can fixtures. Even CFLs produce quite a bit of heat, and the problem may be that the electronic ballast gets fried.
I also have four GreenLite dimmable floodlights, also mounted in can fixtures. So far none have failed, but one is temperamental. Sometimes it comes on for a second and goes off again and I have to “reboot” – switch off and wait a few seconds, or maybe play with the dimmer switch. I don’t dim them often, but I have found that they flicker when dimmed low. They are also among the worst for taking time to get up to full brightness.
Another interesting bulb is a 3-way bulb from Sylvania -- 12/19/29 watts which is equivalent to about 50/85/130 for an incandescent – and I have no complaints. I also have a dozen 9 watt Sylvania decorative globes in the bathroom which have worked flawlessly, with negligible delay in startup and close to full brightness immediately. I have one 19 watt helical Sylvania, however, which has a definite delay (maybe half a second of so) and also seems dimmer now than it was when I first installed it.
I also have a couple of GE helicals – 10W and 26W – which have been very satisfactory.
Finally, I have a 15W Lightwiz helical which was still in its box. I tried it out yesterday and it seemed to work well, but I have not tested it over time.
(I also have one very expensive LED light, which is very blue and so dim that if there is any other ambient light it is hard to see whether it is on or off without looking directly into it!)
All in all I think it is well worth making the switch to CFL, at least if you live in a hot climate; I live in Houston where we use A/C most of the year so producing less heat gives a double benefit and in my case it has contributed to a 25% drop in my electricity bills. (There is no real advantage at times when you are heating the space anyway, especially if heating with electricity.) The biggest problem seems to be failure of the ballast when confined in a can fixture, but some cans seem to provide more space than others. I should perhaps add the obvious fact that this is all highly unscientific and anecdotal. I welcome comments from others on their experiences with CFLs.
Friday, February 1, 2008
Pricing Carbon – Part One
[I am modifying this post on February 15th to reflect the fact that the official IPCC target for GHG concetntration is 550 ppm. The original post referred more vaguely to "most experts" proposing a 450 ppm limit.]
Emissions of greenhouse gases (GHGs, which include gases other than CO2 but which are normally measured in CO2 equivalent) will be reduced by a combination of technology, conservation, and lifestyle changes, but the incentive for all these efforts must be a price imposed on making those emissions. Only then can these “price signals” feed through the economy and influence the decisions made by consumers. The idea of holding the emitter responsible for the total cost to society is not new; economists call effects caused by a particular actor but incurred by society as a whole “externalities.”
But how to determine the appropriate price? There are two basic ways of looking at it: either we can try to calculate the cost of the damage done by the emissions; or else we can decide that we need to set a firm limit on GHG concentration in the atmosphere and then try to set prices in such a way that this is achieved. I will elaborate on each of these, but note that to have any effect the price charged needs to be more than the cost of reducing emissions, at least in some applications. This cost will vary according to circumstances both within and between industries, and the price mechanism will encourage the reduction of emissions in those places where it can be done most economically, while concentrating the remaining emissions in those industries where it is hardest to change. (For example, it is easier to build clean new power stations and to retrofit old ones.)
The first approach to setting the price, based upon the estimated cost if we do nothing, is the one taken by the Stern Review. There are a number of problems with this approach, including two ethical ones:
Firstly, the adverse effects of climate change seem to bear more heavily on the poorest countries. Sub-Saharan Africa is likely to see worse droughts, while much of Bangladesh and all the Maldives may be under water. Meanwhile Canada expects to benefit from an open Northwest passage, Russia will see better agricultural conditions, and prestigious Champagne houses are already considering planting in England. Counting the cost in dollars using current exchange rates does not adequately reflect the suffering of third world countries. Is the loss of a peasant’s house worth less to him than the loss of a tycoon’s mansion?
Secondly, if we do nothing the adverse effects of climate change will build up for ever. Using normal discount rates to discount the far future effectively disenfranchises our grandchildren. We may prefer to spend $1 now rather than $1.05 next year, but can we extrapolate this time preference to conclude that we have the right to spend a $1 now and deprive our grandchildren of $50 eighty years hence? (1.05 to the power 80 is about 50.)
Methods of social accounting exist to deal with these issues, but they rely on subjective assumptions and therefore put the end result in question.
(Incidentally, some argue that if we go all out for growth, emitting greenhouse gases without restraint, we will be much better placed to mitigate the problem however bad it becomes, but this is an act of faith. In any case, how can the Bangladeshi farmer rely on us actually doing what needs doing when the time comes?)
Setting a firm limit on GHG concentrations seems a better way to go, and the official IPCC goal is to stabilize this at 550 ppm. From this we can set targets for emissions each year and then decide either to issue tradable permits (a “cap and trade” system) for that amount of emissions or else set a “user fee” (a.k.a. a tax, though here it really is a user fee) which we estimate will result in the target amount of emissions. On its face, the cap and trade system seems more reliable, since in theory it guarantees meeting the target. On the other hand, the market for permits can experience wild swings which make it hard for industry to plan. User fees could well work better. Their effects would need to be monitored and the rates adjusted as necessary but these adjustments would be more gradual and predictable than market swings. And they could be revenue neutral if they replaced existing taxes. Suppose industry was taxed solely on its emissions?
Part Two will probably appear late next week and will discuss the range of carbon prices resulting from each of these methods (including the European cap and trade system) and what it means to the consumer. Topics for other postings planned for the next few days include personal experiences with CFLs, and the Tesla electric car.
Emissions of greenhouse gases (GHGs, which include gases other than CO2 but which are normally measured in CO2 equivalent) will be reduced by a combination of technology, conservation, and lifestyle changes, but the incentive for all these efforts must be a price imposed on making those emissions. Only then can these “price signals” feed through the economy and influence the decisions made by consumers. The idea of holding the emitter responsible for the total cost to society is not new; economists call effects caused by a particular actor but incurred by society as a whole “externalities.”
But how to determine the appropriate price? There are two basic ways of looking at it: either we can try to calculate the cost of the damage done by the emissions; or else we can decide that we need to set a firm limit on GHG concentration in the atmosphere and then try to set prices in such a way that this is achieved. I will elaborate on each of these, but note that to have any effect the price charged needs to be more than the cost of reducing emissions, at least in some applications. This cost will vary according to circumstances both within and between industries, and the price mechanism will encourage the reduction of emissions in those places where it can be done most economically, while concentrating the remaining emissions in those industries where it is hardest to change. (For example, it is easier to build clean new power stations and to retrofit old ones.)
The first approach to setting the price, based upon the estimated cost if we do nothing, is the one taken by the Stern Review. There are a number of problems with this approach, including two ethical ones:
Firstly, the adverse effects of climate change seem to bear more heavily on the poorest countries. Sub-Saharan Africa is likely to see worse droughts, while much of Bangladesh and all the Maldives may be under water. Meanwhile Canada expects to benefit from an open Northwest passage, Russia will see better agricultural conditions, and prestigious Champagne houses are already considering planting in England. Counting the cost in dollars using current exchange rates does not adequately reflect the suffering of third world countries. Is the loss of a peasant’s house worth less to him than the loss of a tycoon’s mansion?
Secondly, if we do nothing the adverse effects of climate change will build up for ever. Using normal discount rates to discount the far future effectively disenfranchises our grandchildren. We may prefer to spend $1 now rather than $1.05 next year, but can we extrapolate this time preference to conclude that we have the right to spend a $1 now and deprive our grandchildren of $50 eighty years hence? (1.05 to the power 80 is about 50.)
Methods of social accounting exist to deal with these issues, but they rely on subjective assumptions and therefore put the end result in question.
(Incidentally, some argue that if we go all out for growth, emitting greenhouse gases without restraint, we will be much better placed to mitigate the problem however bad it becomes, but this is an act of faith. In any case, how can the Bangladeshi farmer rely on us actually doing what needs doing when the time comes?)
Setting a firm limit on GHG concentrations seems a better way to go, and the official IPCC goal is to stabilize this at 550 ppm. From this we can set targets for emissions each year and then decide either to issue tradable permits (a “cap and trade” system) for that amount of emissions or else set a “user fee” (a.k.a. a tax, though here it really is a user fee) which we estimate will result in the target amount of emissions. On its face, the cap and trade system seems more reliable, since in theory it guarantees meeting the target. On the other hand, the market for permits can experience wild swings which make it hard for industry to plan. User fees could well work better. Their effects would need to be monitored and the rates adjusted as necessary but these adjustments would be more gradual and predictable than market swings. And they could be revenue neutral if they replaced existing taxes. Suppose industry was taxed solely on its emissions?
Part Two will probably appear late next week and will discuss the range of carbon prices resulting from each of these methods (including the European cap and trade system) and what it means to the consumer. Topics for other postings planned for the next few days include personal experiences with CFLs, and the Tesla electric car.
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