Archive for Carbon Dioxide Emissions

Making Carbon Pricing Work Better

When it comes to the most economically efficient way to reduce Greenhouse Gas Emissions(GHG), the economic consensus is that a carbon tax, or, failing that, a carbon trading scheme is the best way to go. The idea is that a price for carbon will raise the cost of carbon-producing activities, nudging people and companies towards less harmful behavior.

I have a problem with this line of reasoning, since it rests on the false assumption that price signals are the most effective way to change behavior. That’s true is an economist’s ideal efficient market, but a moment’s reflection shows that the markets we want to affect are far from efficient.

Electric utilities are regulated entities, and hence insulated from market forces. Consumers don’t respond well to price signals either, because most don’t understand where they are wasting energy. If they did, there would be a run on caulk to air seal homes, since the payback from air-sealing can be a matter of weeks. If a 1000% annual return from air sealing is not enough to get people to spend a little time with a caulk gun, is increasing the return to 1200% with a carbon tax really going to make a difference?

Compact fluorescent bulbs are another excellent example of how the energy market often fails to be efficient. The payback on CFLs is usually on the order of months, but uptake was very slow until recently, now that higher wattage incandescent bulbs are being phased out. By regulation.

The adoption of CFLs is a concrete example where the most economically efficient outcome is being achieved by regulation, after years of failure by market forces.

I had just finished making the above case to an economist at a mixer at The Cary Institute in Millbrook, NY when I was asked to write for a public radio program sponsored by the Institute.  Earth Wise logo I had been talking to the Institute’s volunteer coordinator about opportunities that make use of my skills, and she hit on helping them write some segments for Earth Wise, a daily 2 minute radio program on WAMC.

So I went home and wrote up my ideas, outlined above, on carbon pricing.  The first draft did not work for them, since they had aired a program in favor of a carbon tax, so I re-wrote it with a focus on making carbon pricing more effective by making the energy market more efficient.   The result aired on July 3rd, and you can listen to it or read it here: http://wamcradio.org/EarthWise/?p=2668.

With only two minutes, it’s an interesting exercise of packing my ideas into just 280 words, especially considering that for me, 600 words is what I consider a short peice, and it’s not unusual for me to write several thousand.

For future episodes, I plan to tackle less complex subjects.

Comments (2)

A Flaw in Most Well-to-Wheel Studies of EVs and PHEVs

A post on 2GreenEnergy inspired me to talk about a flaw in Well to Wheel studies of vehicles that has been bothering me at a low level for years. Such studies attempt to quantify the emissions of vehicles based on the entire life-cycle of the fuel they use. For plug-in vehicles, this requires understanding the source of the electricity they use.

Put simply, every study I’ve read uses the average electricity generation mix. But all good economists think at the margins: The electricity going into EVs will be marginal generation: that which is built (or runs for additional hours) to meet the new source of demand. Since few new coal plants are being built in the US, and those that are here do not have much extra capacity, the marginal new electricity that will be used to power EVs will be mostly Gas, Wind, and Solar, since these dominate the mix of new generation being built, and among existing plants, only Gas has the ability to increase existing capacity factors substantially.

Since all these sources of electricity are cleaner than the average mix, studies that focus on the average utility mix understate the emissions reduction benefits of EVs. The answer may be different in China, where they are still building coal (as well as nuclear and renewable) generation at a breakneck pace.

Comments (4)

Poster Boy For Unintended Consequences: Rewarding Green with Air Miles

Tyler Hamilton writes about the use of Air Miles to encourage green behavior in Canada. Although the AirMiles.ca website has a section where the miles can be redeemed for eco-friendly products, most people use Air Miles for free plane trips.

Does that strike anyone else as odd?

To me, it sounds like saying “If you recycle, buy green electricity, and change your lightbulbs, I’ll help you get a free plane flight, which could easily erase the gains from your green behavior change.”

Comments (2)

The Cost of Transmission

Tom Konrad, Ph.D.

I’ve been reading a report out of the Colorado Governor’s Energy Office called The REDI Report: Connecting Colorado’s Renewable Resources to the Markets in a Carbon-Constrained Electricity Sector.  I summarized the REDI report’s main conclusions and drew some conclusions for stock market investors here.

I found the report’s discussion of transmission costs particularly interesting, because I’ve had trouble finding numbers for the cost of transmission in the past.  I once resorted to Wikipedia in order to find costs for transmission when comparing them to the costs of large scale electricity storage.  If you don’t think that the two are comparable, consider that long distance transmission can reduce the net variability of wind and solar, making it possible to integrate these renewable forms of generation without the cost of expensive storage.  That’s why even net-zero electricity homes are connected to the grid: it’s prohibitively expensive to buy enough batteries to keep the lights on 24/7.

Here are a couple cost charts from the report:

I took the data from the above table, and plugged it into my spreadsheet comparing the costs of electricity storage.  Below are the updated graphs (click for enlarged versions.)  The notation "2-500 kV AC" means a Double-circuit 500 kV AC line.  As in the storage comparison, I computed the costs and round-trip electricity losses for a 1000 mile line, since that was the example I used in my original Transmission/Storage comparison.

 

Comments (15)

Clean Energy Needs More Brawn, Less Brains

We’re way behind the curve on climate change.  Only after we have a new President is the US likely to take action to limit greenhouse gasses.  Meanwhile the artic ice sheet is vanishing faster than any of our models predicted, and the world is emitting more carbon than even the most pessimistic IPCC projections.

Given that backdrop, it’s too late to wait for some new technology to come along and save us, be it cellulosic ethanol or carbon capture and storage.  Investors should keep that in mind, too. 
When the world wakes up to the urgency of Climate Change, more money will be spent on near term solutions than research into new technology.  

The scale of the problem is daunting, which is why I believe there is such a temptation to invest our hopes in new technology, as opposed to investing our dollars in the technology we have today, which can take us most of the way we want to go, if only we can muster the political capital (the cost is negligible, because the efficient use of energy almost always than pays for itself and then some.)

That’s why I’m calling for a Clean Energy Marshall Plan.

Comments off

Off topic: How Do the Candidates Stack up on Clean Energy?

A trip down to the local national party offices to participate in a press conference asking the presidential candidates to pledge their support for clean energy legislation got me thinking about the candidates… I wasn’t sure which candidate has the best clean energy platfom. So I spent a day reading thorough thier platforms, and came to a surprising (to me answer).2008 Election

You can read how I think the candidates’ platforms compare on clean energy here.

Comments off

The Scary Side of Colorado’s “New Energy Economy”

Here’s a disturbing article about how Colorado Governor Ritter, who has done great things revitalizing Colorado’s renewable energy and energy efficiency economy, but is also a fan of Alberta’s Tar Sands, and Shell’s plans for extracting energy from Colorado’s Oil Shale.

If extracting Tar Sands has a massive carbon footprint and environmental impact, the Oil Shale is likely to be much, much worse.

Comments (1)

Older Posts »
Follow

Get every new post delivered to your Inbox.

Join 152 other followers