Posts by bubu:

    On Taxes and Caps

    May 8th, 2009

    supply-and-demand-graphCapitalism ruins everything. Unless policies can shape it otherwise. Or so goes the dominant thinking today.

    If only we can give carbon a price signal, then all the incentives to truly launch a green economy would be in place.  And then, it’d be, “Houston, we’re go for launch.”  Uh-oh, we’re starting to sound like Tom Friedman, and we have mixed feelings about that here.

    The question that is being debated right now, and it is an exciting question precisely because it is being debated at all, is: Which carbon-pricing policy do we choose?  Do we go for the politically unpalatable raising of taxes?  Do we throw in a linguistic wrench and try to fool the public by calling tax increases tax shifting?  Or do we go for a cap-and-trade scheme?  Or, better yet, in another marketing ploy, how about we call it “cap-and-invest”?  That sounds promising, doesn’t it?

    For those of you who are not policy wonks or professional economists, the menu of possibilities can be difficult to navigate.  I have a solution for you.  More precisely, I have a website for you here.  Holmes Hummel is a former Congressional Science Fellow (not that I know what that means, but it sounds impressive) and she currently teaches a course at Berkeley’s Energy Resources Group call Climate Policy Design.  Her website breaks down the mechanics of carbon-pricing policies.  Highly recommended.  Let me say that again.  Highly recommended.  For starters, click on “Recent Posts” and then “Overview of Price-based Climate Policies.”

    A couple of highlights from her presentation:

    1) Coverage.  I wondered aloud a while ago about why there seems to be missing hoopla surrounding carbon emissions from the agricultural sector.  Answer: coverage.  Okay, to back up: what does coverage really entail?  For any policy to work, carbon-emitting sources needs to be easily measured, reported and verified.  That’s coverage.  Not easy to measure, report or verify emissions from a farm.

    2) Political risks.  Policies have to get passed through an imperfect political process.  That means we have to take into consideration political risks.  The easy formulation for gauging political risk: probability x consequences.  Cap-and-trade, from an environmental perspective, is a much better device for risk management.

    3) 100% auctions.  Under a cap-and-trade scheme, it is possible to either auction off emissions allowances or simply give them away for free.  If we grant allowances for free to industrial polluters, that represents a significant transfer of wealth from taxpayers to industry.

    4) Benefit incidence.  It is very very important to think about how the costs of a plan will be distributed across society and how the benefits will be distributed as well.  A straight carbon tax would be highly regressive, hitting the poor much harder than the rich.  So in the spirit of Van Jones, let’s keep social equity issues in mind as we press forward on a carbon-pricing policy.

    If none of that made sense, check out Hummel’s website.  If some or all of that made sense, check out Hummel’s website.  ‘Nuff said.

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    Engineering Bias: a Transaction Cost?

    March 9th, 2009

    engineersIt’s very tempting to view today’s energy problem as essentially an engineering problem. A quick scan through popular media turns up all sorts of reporting about the promise of new devices that will help us reduce our energy consumption and thus both our environmental footprint and our dependence on foreign oil. On the supply side, we hear about the need to invest in solar and wind power, or just more efficient, cleaner methods of extracting energy. On the demand side, we hear about pushing for fuel efficiency in vehicles, energy efficiency in our buildings and everyday appliances. These are all good things, positive developments to get excited about. But the one thing that such “solutions” have in common is an engineering perspective, and I worry about this engineering bias.

    For one thing, viewing the energy problem in this way allows the layperson to deflect personal responsibility. Climate change? Dependence on foreign oil? Air pollution? These are problems for engineers to solve, one might say. Such a deflection of personal responsibility dictates business-as-usual for all non-engineers. That kind of mentality is worrying when there are demonstrated gains to be had in human behavioral changes.

    Also, single-minded focus on engineering solutions crowds out more systematic ways of thinking. Gains in energy efficiency do not have to come at the level of devices. A couple of weeks ago, I attended a lecture delivered by a PhD student from Stanford’s Precourt Institute for Energy Efficiency. The student’s research related to CDMs (Clean Development Mechanisms), which are institutionalized methods for industrialized nations to curb their own environmental footprint by offsetting carbon emissions more cost-effectively in developing countries. The student observed that transportation systems are being overlooked as an offsetting mechanism and proceeded to analyze the cause of this prejudice. Turns out that the panel that is responsible for approving CDMs is staffed by engineers. It also turns out that it’s much harder to quantify to the satisfaction of an engineer’s standards the carbon offsets that result from developing a transportation system. (Warning: I am definitely butchering the nuances of the research and the empirical analysis of the causal relations, but this is my take on the talk.) When you take into account these things, it begins to make sense why a panel of engineers might overlook systematic improvements in favor of device-level projects. The idea behind CDMs is to provide an efficient platform for industrialized nations to reduce carbon emissions, but it appears that an engineering bias presents a significant transaction cost that hinders the program’s cost-efficiency.

    So what big systems-level improvements might we be overlooking right now? Well, this is a thought piece, so I am just going to throw some ideas out there. In addition to transportation systems, I think that the energy-intensity of agriculture needs to be looked at more systematically. And I think policymakers need to think more seriously about reversing urban sprawl and stepping up urban revitalization.

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    Two Metabolisms

    February 25th, 2009

    cradle_coverA long time ago (2002), in Cradle to Cradle, William McDonough and Michael Braungart introduced the idea that we need to think about materials as belonging to two different metabolisms, namely a technical metabolism and a biological metabolism. The authors argued that waste predominantly results when the two metabolisms get mixed up and confused with each other in “monstrous hybrids.”

    It’s an interesting idea that I believe is fundamentally right, but it seems that putting the idea into practice is (surprise!) infinitely more complicated. (An interesting article about McDonough and his complicated visionary status can be found here.)

    But I’m not writing to talk about the practicality of zero-waste design, I’m writing to extend the idea of two metabolisms to energy consumption and energy efficiency. I’ve been casually grappling with the idea for a bit now, but I think I’ve come to something of a revelation with the aid of revisiting Cradle to Cradle.

    Just like materials, our energy consumption can be thought of as belonging to two different metabolisms. One industrial/technical and the other ecological/biological. Energy efficiency makes sense only in the context of industrial energy, because industrial energy belongs to a metabolism whose primary input is carbon-emitting fossil fuels. With regards to the ecological metabolism, energy efficiency makes no difference whatsoever.

    All the hoopla these days is about increasing the efficiency of industrial energy. I’m beginning to believe that we should really be focusing our efforts on first understanding and then manipulating the interaction between industrial metabolism and ecological metabolism. Okay, that’s a bit confusing. But bear with me, this is an idea in progress.

    Let’s take buildings as an example. We could and indeed are beginning to focus our energies on how to make buildings more energy-efficient. Such efforts belong to the industrial camp. But if we stop thinking about buildings as devices to be engineered, if we get away from the industrial logic of energy efficiency, then we get a different picture and a whole set of different questions. How can we get buildings to partake in an ecological metabolism? How can we capitalize on natural energy flows (regardless of efficiency) to satisfy our energy demands?

    In my opinion, we should be trying to maximize our dependence on ecological metabolism while minimizing our dependence on industrial metabolism. Rather than focus on the efficiency of devices, we ought to focus on how to be more a part of an ecosystem. I’m not entirely sure about this, but I think there is potential in exploring the different types of thinking that follow from the different types of metabolisms. Is it possible to reduce our dependence on industrial metabolic logic?

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    Energy Perceptions

    February 10th, 2009

    Sure, it gets 330 mpg highway, but can it unplug your cell-phone charger too?

    There certainly is a lot of talk about being green these days. A lot of publicity on a lot of different fronts. Given the media exposure, I think it would be prudent to see how well perceptions match up with reality.

    As I am sure many a commentator has noted before, there is a truly disproportionate amount of attention being paid to three letters in particular: M-P-G. A lot of people seem to regard the mpg of your vehicle as a merit badge, a barometer for just how “green” you are. The unfortunate truth is that mpg represents but a small slice of the energy pie, even when considering the transportation sector in isolation. First, we should be concerned not about miles, but about passenger miles. Five people carpooling in a gas-guzzler surely beats five people each driving their own hybrid car. Second, we need to account for the embodied energy in the production of a new vehicle. With regards to transportation, we should ultimately be thinking about how to take cars off the road, and how to get people to share cars, bike, walk or use public transportation.

    The outsized attention being paid to vehicular fuel efficiency ought to give us pause. How else do the various loci of media scrutiny skew public attention on energy issues? There are a lot of commercials these days about the wondrous possibilities of a smart electric grid and smart devices (vehicles included). Is all the hoopla deserved? Does it crowd out other energy interests? By many estimates, agriculture accounts for fully one-fifth of U.S. petroleum consumption. But is one-fifth of our attention being directed towards increasing the energy efficiency of agricultural practices? I don’t have any numbers to back me up on this, but I would guess not.

    Media scrutiny is important because it plays a role in shaping the public conscious and directing public as well as private funds towards the development of various initiatives. It would behoove the “green movement” to think about how the allocation of media attention matches up with underlying realities.

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