Bush, Kyoto, and Global Warming

Today, there is news that Bush calls for global goals for emissions.

Following up from my post below about Energy Demand and Productivity data from the McKinsey report, this news is quite timely. Analyzing the present carbon emission contributions and growth rates across the globe, - and seeing the shared and increasingly distributed extent of global carbon emissions - you get a sense that the U.S. rejection position on Kyoto wasn't as dead wrong as the environmentalists and liberals (myself included) were first thinking.

As I see it, the ability to globally align an effort to curb carbon emissions comes down to two very simple, conflicting notions.

Notion One: Since the developed world did most of the harm in CO2 emissions to date, and continues to pollute the most per capita, the burden to improve and fix the problem lies squarely and firstly there, in countries like the United States, Germany, United Kingdom, Canada, and Japan.

Notion Two: We're all in this together. Regardless of how we got here, we need to look at the straightforward math of who's putting out CO2, how much growth will occur in each polluter country, and a means to reduce those growth rates across all countries. That math says that the biggest gains/improvements can be made only when we are reducing carbon emissions in the biggest emitter countries.

The Kyoto accord was very much in alignment with Notion One - developed countries pay now, and that China and India get a "free pass" until the next round of cuts next time.

But what was the right approach? This is a hard dilimmna, and I've shifted my view CLOSER to the Bush administration. One can say that Notion One has progressive justice and ethics on it's side, but I am seeing a new fairness and efficiency in Notion two. Maybe it's just becoming a parent, and arbitrarily putting all my kids in "timeouts" regardless of how, when, and who started the latest ruckuss. The point being, looking to the past and trying to establish total fairness is secondary to fixing the immediate problem at hand.

In fact, if your trying to fix the problems of emissions with one set of countries obeying one set of rules, and then allowing a different set of countries to have no rules, you end up with those countries actually growing the problem you are trying to regulate and fix. That's broken.

Is it fair to crimp on China's growth when they consume 1/20th the power of Americans?

Perhaps "next time around" the solution lies in both sides coming to a compromise approach. Something that balances the fact that sacrifices have to be shared, reduction progress has to be made across the globe, AND that those sacrifices are somehow fair-weighted to both past pollution and present per capita considerations. Heck, a similar compromise approach solved the constitutional crises in forming America in the 1770s by giving smaller States equal representation in one governing body - the Senate, and giving the bigger, more populous states more representation power int e House of Representatives.

Maybe the way to Kyoto isn't through Montreal, but in a bicameral emissions reduction math - everybody pays, and the biggest polluter hogs pay more?

Great Energy Demand Side Data and Presentation

Every once in a while, there is a piece of energy news/reporting that is so good, so clear and compelling, I feel like emailing it to everyone I know. Nowadays, fortunately for them, I don't have to do that anymore, this is what a blog is for :)

E&ETV has posted their May 17th presentation by McKinsey Global Institute on their recent report, "Curbing Global Energy Demand Growth: The Energy Productivity Opportunity".

This is a MUST watch video, and I recommend that open a second browser window so you can see the slides that are being discussed by separately clicking on the SLIDES here:

The most fascinating aspects of this presentation to me were:

#1. Who Knew? Who knew that in the next 20 years, it’s the “Middle East” that is responsible for the biggest global impact in energy demand and use. And we all thought it was the Chinese. Yes, the Chinese are second in energy demand growth, but the Middle East is, percentage wise, on an even bigger tear into more energy demand.

#2. Bitter irony: Energy prices go up, but demand doesn’t necessarily go down globally? Because those very same middle easterners have so much more money/consumption that they EQUAL the diminished demand from the developed world.

#3. U.S. will remain an energy hog, even 20 years from now, even with ½ the growth rate of China and Middle Eastern energy demand. Our hogginess could be substantially abated with policies to encourage more efficiency – no surprises there. But what is surprising is how grossly lazy we are in present efficiency policies. U.S. TV sets, for instance, have a “dormant” power draw of 60 watts (meaning when they are “off” they are still burning through 60 watts.) European sets are mandated to 1 watt. Simple stuff, and no impact to quality of life, but it speaks to whether you want a government regulating efficiency, or expect the market to efficiently do this. Readership knows where I fall on that spectrum (hint: U.S. markets are failing us).

Our First Press: Business 2.0 Article

Wind-Sail has a short write-up in this month's Business 2.0 magazine. You can see it in print, or click through the Business 2.0 issue here. (we're on page 28)

Or you can read the whole blurb below... All very cool and I'll be curious to see what kind of dustup this generates. Of course, another generous thanks to Janet Rae-Dupree for covering this in December on her blog, and now contributing this piece for Business 2.0

Moving the Needle in Energy Efficiency

One of the most neglected areas of investment/startups in cleantech, in my view, has been in energy efficiency. That now seems to be changing. The New York Times is reporting on an energy efficiency study by the McKinsey Global Institute that examined projected energy savings Americans could achieve with focused energy efficiency standards.

This graphic shows total power used in typical American households (in Quadrillion BTUs), and shows what kinds of savings are achieveable with present advanced techniques.

Below is some additional analysis that helps clarify where the biggest gains are achieveable. In summary, we can cut out total U.S. household energy bill by 35% by implementing existing technology.

If I were investing in the space, I'd look at the Appliance category, as it gets you the most bang for the buck, and a decent improvement ratio from what's out there today.

People Moving and Power

Two interesting web connections on the movement of people on the planet and in the United States.

Thanks to Paul Kedrosky for pointing me to this very cool, flash based global map of where people are moving on the planet. Surprised to see the relatively low movement out of China. I suspect that the data has been normalized to mean percentages of inbound and outbound movement. Must be, as China would presumably have orders of magnitude more activity than Peru without normalization. It's a pity that Asia-to-America and Asia-to-Great Britain traffic goes across the rest of the map, as it's hard to discern which dots are going where between and betwixt these edge cities. Someone needs to redo with a "wrap" function so that we can separate out patterns of East-to-West and West-to-East from any country a little easier.

With richer specific data, jonrayjay has parsed U.S. Census bureau data to come up with a notion of the Great Decline of the Coastal Megalopolises. Putting my All Power Is Geography hat on, this population shift in is mostly a net neutral impact for solar, and in general, quite a bad thing for wind. As you can see from even the cartoon picture here, leaving the coasts means leaving some of the best wind resource in America. On the positive side, it means a lot less consumption of heating fuels in the winter. On the negative side, it also means a lot more stain on already constrained internal water resources, and more power to power hungry AC. (Actually, AC consumption and it's strain on the grid is floating north as well.)

All Power Is Geography, Part Three

In previous posts, (Power Geographies Part One here, Power Georgraphies Part Two here) I've written about the comparitive nature of renewable energy sources. That we shouldn't be thinking that solar is "competing" with geothermal, tidal, wind etc. but rather, that geographies will dictate local power pareto optimums.

In my third installment, just one more quick example of the geographical nature of local power paretos. This list of City based case studies speaks perfectly to the point that people will optimize their local clean power best on the best local resources available. Again, where it's windy take wind, sunny go solar, etc. etc.

Nothing For Free

So, after trumpeting the Montreal Protocol as an umitigated success in reducing CFCs in the atmosphere and "saving the Ozone layer", I should have known that nothing comes for free. Turns out, according to USA Today article that the replacement coolants — hydrochloroflourocarbons— are potent greenhouse gases that harm the climate, up to 10,000 times worse than carbon dioxide emissions.

O well, maybe we can't get to Kyoto from Montreal after all.

Kyoto by way of Montreal

Last night, I was talking with a friend about market forces and market failures of carbon emissions. Specifically, we agreed that there is no way that you can price the cost of carbon emissions sufficiently enough to curb the problem on a global scale. Beyond this market failure, we'll most certainly need an enlightened set of government leaders across the globe to initiate hard decisions to change our trajectory. No easy task.

This morning it got me thinking... what does government do well? When does government dictate a policy based on what is right, and then solve the market/economics/pricing of that decision later, especially on an international scale. Well, warfare seems to be one. But what about the environment? And then I found my first answer. CFC emissions. Remember those nasty, ozone-depleting freons that lofted up into the air, turined into chlorine gas, and then wreaked havoc on O3, especially over the polar caps?

The leaders of the world did manage to agree, and drive through policy, substantial change and mitigate the CFC problem. Twenty years after the signing of the Montreal Protocol, CFC emissions are below 20% what they were in 1980, and though it's a slow path, scientists are optimistic that the hole will be completely gone in 50 years.

What was magic in Montreal and how can it help get us to "Kyoto" (a successful, international government campaign to reduce carbon). One quick search on Google and I found this writeup from MIT on Lessons Learned From the Montreal Protocol for Global Warming.

It's a decent read, though personally, I would like to have seen a little more concrete details on how the Protocol was able to push through policy in light of contested scientific data, as well as, which came first, the threat of CFC bans from government, or Dupont's market englightenment that a chemical replacement strategy could be profitable.

In fact, it doesn't matter which came first, because you get a sense that Dupont had sufficient market share and technical know how to make a profit ON the banning of CFCs. I'd say the opposites are true on global warming. No one entity has any controlling share of carbon emissions, and worse, the biggest polluters on the planet (the citzenry of the planet using billions of individual cars, stoves, tree-cutters, etc. ) have zero ways to make profitable moves someplace else, and real, direct costs to doing anything but burning easy and cheap fossil fuels.

The article closes with it's most relevant point, and yet, did little to draw out how the Montreal Protocol tied the science to the policy as quickly and effectively as they did.

• The effectiveness of any strategy on global warming will depend on how well it creates new markets. That much was learned from the Montreal Protocol. But perhaps the greatest lesson is also one of the simplest: when science shows us a looming environmental disaster, we need to act quickly and decisively, regardless of the economic or technical uncertainties.

What we need is an "ozone hole" picture for global warming, a one image graphic that can speak to the impending danger, as well as the comprehensive impact of global warming. Most of us have seen that Al Gore image of rising temperatures and peak years of hot weather. But as a chart, it's not as emotional as a picture, and there are "outlying" years that also create doubt and angles for obstructionists. (such as "why didn't it get warm in the 1950s when carbon emissions took off, etc. etc.). I'm on the hunt, stay tuned...

Determining Your Own Carbon Footprint and Future Carbon Tax Bill

I was doing some back of the envelope math on carbon credits and carbon pricing. I was curious as to how much carbon I produce in my automobile and house, and what the "market price" is for offsetting personal carbon emissions by purchasing carbon "credits."

Starting on the pricing side, the average price for carbon emissions offset seems to be around $15 per metric ton. (See http://www.carboncounter.org/ to get started).

On the carbon generation side, you can calculate your personal "carbon impact" at http://www.becomeafriend.org/carbon/.

In general, my house hold is emitting approximately 18 metric tons of CO2. Unfortuantely, that's quite "above" the 12 metric tons average for a family in America, and we got dinged hard on all the business travelling I do by plane (40% of our footprint and more than both cars combined) Assuming a $15 carbon tax, my household would see a substantial $270 in carbon charges.

Much has been written about the benefits in making this market predictable and deterministic. And even my quick exercise shows that the wild range of $4 to $40 for offset purchase credits could significantly change my potential future carbon tax scenario ($75 to $750 per year). Speaking from a purely market-centric, rational consumer standpoint, I'm not inclined to do a lick of change in my behavior to avoid $75 in taxes, but I could start to consider changes at $750 or higher.

Bringing this back to Wind-Sail and cleantech for a moment. I do think market forces can impact, but not wholly correct, the problems we're creating with carbon emissions and global warming. Unfortunately, as an "externality" to pricing energy, carbon emissions quite literally "break" the market. And any significant trajectory changing behavior is going to have to come from market + government forces. In my next post, I'll look back to the Montreal Protocol, which was a primarily non-market, governmental and policy force that drove the dramatic reduction of ozone-depleating CFCs ("freon") from our lives.

Is Global Warming At "Phase Two"

My wife had an interesting observation this morning... Her basic sentiment was that the big surge in cleantech and going green is directly driven by the generally warmer temperatures we're experiencing in our daily lives. "It's just warmer all the time, and this has people thinking about carbon in a much more visceral way."

All obvious, yes, but the point here I think is an interesting one. Is it just me, or is the speed of warming stunning. I think we're past the "first warning signs" of an unusually warm winter here or there, or a spot "hot day" in December, or a run of European heat wave weather. Phase one could also be marked by "macro" markers, like melting polar ice caps (too far away to viscerally "feel", and shifting butterflies north in the U.K. (only visceral to butterfly catchers.)

I think we're entering phase two. Phase two has more local, visceral ways to see global warming. Like tropical Palm Trees growing in Tenessee.

What this means for the adoption of cleantech is positive. How quickly this drives real market forces and pricing is less clear.

Here'a a good piece in the New Yorks Times on a "phase two" impact of global warming to gardening in the United States.

The End of Nameplates?

Last month, I wrote about cleantech's erroneous use of 'nameplates' as a key metric for evaluating the power production of renewable energy power systems. (see Nameplate series here, Part Two, and Part Three.)

Since then, I've had the pleasant surprise of two separate VC meetings in which the investors had gotten to the same place I had... that nameplates were not wholly useful and that yearly power produced was the high order bit. Again, in typical VC tap-dancing fashion, I had to reformat on the fly my cost and ROI modelling to fit their newfound attraction to ypp (yearly power produced).

Interestingly, here is a very good write-up on
France's nuclear power industry,
and what percentage of France's power comes from nuclear power. What's clear to me is that this overly complicated mess could be drastically improved by disregarding installed capacity as a power market statistic. I made similar comments at the end of that post here.