Simplicity, only through complexity

I just finished reading Questions of Character: Illuminating the Heart of Leadership Through Literature, by HBS professor Joseph Badaracco. It came recommended and I enjoyed it - not everything he said rang true to me, but it was a reflection-inspiring book, which is really about all one can ask for from a book that purports to teach leadership.

One quote that stuck with me was:
Compelling simplicity cannot be achieved without grappling with complexity.
This is very true in general, and definitely holds with complicated natural resources issues. The solutions (cap-and-trade?) are not that complicated at their core, but it takes a very deep understanding to get them right. Developing that type of understanding is why I started this blog, and why I enjoy it so much.

Plenty of lithium after all?

Nissan recently announced that the 24 kWh battery for the LEAF, its electric car, would use approximately 4 kg of lithium. Some industry observers were concerned that lithium availability would be a bottleneck for the budding electric car industry, but via Green Sheet, an expert contributor to the Gerson Lehrman Group runs an analysis based on the Nissan announcement and concludes that there may be plenty of lithium after all:
Lithium supplies from exisiting and expanded operations are therefore more than sufficient to meet potential demand for 500,000 lithium-ion battery powered vehicles in 2015 and could potentially meet demand for up to 2 million lithium-ion battery powered HEV and EV vehicles in that same period... Oversupply might be a more pressing question than lithium availability.
This is great news for companies planning to make electric cars, promoters of electric cars in general (e.g. some major cities), and probably the overall fight against climate change. It is not such good news for Evo Morales and Bolivia, who possess about half of the world's known lithium reserves and had grandiose dreams of major companies and country governments begging for minority stakes in lithium extraction operations.

If it's any consolation to them, resource wealth is often a curse and doesn't have a great track record of bringing long-term prosperity anywhere else...

Research: Higher temperatures TERRIBLE for staple crops

I knew Michael Roberts had a good blog; I didn't know he was working on monumentally important and relevant research on the impact of temperature on staple crop yields:
We set out to develop a better statistical model linking weather and U.S. crop yields for corn, soybeans and cotton, the largest three crops in the U.S. in production value. Our major new finding is that (by far) the best predictor of yield is a measure of extreme heat: how much temperatures exceed about 29C (84F) during the growing season. The threshold varies somewhat by crop--29C is the threshold for corn. Below this threshold, warmer temperatures are more beneficial for yields, but the damaging effects of temperatures much above 29C are staggeringly large.
They introduce a measure I had not seen before, but makes a lot of sense - "degree days above 29C".
A good measure extreme heat is degree days above 29C. This is calculated as (Degrees Above 29C x Days) summed up for all time (including fractions of days) at each temperature above 29C. The more degree days above 29C, the lower are corn yields. Historically, average degree days above 29C during the growing season were about 57. Under the slow warming scenario (we cut emissions to 50 percent of 1991 levels by 2050) this number is projected to rise to 194 by 2070-2099 and corn yields are estimated to decline by 46 percent [emphasis mine]. Under the fast-warming (business as usual) scenario, degree days above 29C are projected to increase to about 413, and estimated corn yields decline 82 percent [emphasis mine].
Their findings on adaptation are particularly troubling:
Somewhat surprisingly, we find no evidence that farmers in the warmer south have been successful in adapting to the higher frequency of temperatures above 29C. This is troublesome as we hoped to learn from warmer regions how farmers might adapt to more frequent temperature extremes.
What are the implications?
These big estimated impacts are important because the U.S. is by far the largest producer and exporter of agricultural commodities. This is especially true for corn and soybeans, which are two out of the world's four most important staples (the other two are wheat and rice). If U.S. yields go down a lot, it drives up prices of staple food commodities all around the world. Almost surely the poor in other parts of the world, particularly developing countries that import food, would suffer far more than the U.S. would.
And the caveats?
There are three major caveats: (1) CO2 fertilization may offset some of these negative effects--something still under significant debate; (2) Seed companies (Monsanto) might develop more heat tolerant crops in the future (but we find little evidence of adaptation in the past); and (3) Farmers will be able to offset some of the losses by shifting where they grow different kinds of crops.
There are more detailed findings in his post. I'll say again that this appears to be critical research that highlights the consequences of climate change for both the broad world food system and U.S. farmers in particular. In fact, it would be great if this were publicized more broadly and were able to shift the opinions of some obstinate agricultural states on the importance of addressing climate change.

Update: He answers my question on longer growing seasons:
R: Great research - love your approach and the conclusions are frightening (but better that we know, and have our eyes wide open).

One other mitigating factor I can imagine is longer growing seasons - any idea how much this could counterbalance the fall in yields? (probably not much, just curious)

Michael: R,

Thanks for your comment and good questions.

We did investigate adjusting growing seasons by moving everything back one month (see the supplement). This does offset damages a little (I recall about about 10 percentage points in the long-run worst-case scenario, but see the supplement for a precise number). We were wary about moving things much earlier since the sunlight and sun orientation would shift so much and the the model implicitly holds these fixed.

Pat on the back: Mackay in NYTimes/IHT

David Mackay is in the NYTimes/IHT with an article on the future of energy, featuring his charts and arguments on the land footprint of renewable energy; you saw it here almost a month ago (pats self on back).

Green meat

Few creatures would seem as beneficent as the cow. Properly grazed and groomed, it gives us burgers and brie, boot leather and fertilizer. Lately, however, radical green groups and celebrity vegans like Paul McCartney have made cows out to be weapons of mass destruction: not only has their meat caused an epidemic of hypertension and heart disease, but they also trample rainforests, trash the soil, and foul the air with greenhouse gases.
That's the beginning of a Newsweek article called "The Cow Turns Green". The article could have used some stronger fact-checking (its feed ratios for chicken/pork/beef are off, and I find it hard to believe that cattle grazing accounts for 72% of Canada's GHG emissions), but it highlights the macro environmental issues with meat production - GHG emissions and land use/deforestation - and mentions a few initiatives by governments and businesses to address these problems before the environmental - not to mention PR - damage gets much worse.

The article also nails the reason why meatless Mondays in the developed world won't solve the problem alone:
Even if everyone in the rich nations swore off meat today, consumption would continue to soar, thanks to the burgeoning middle classes of China, Brazil, and other nations. Brazilians today eat 89 kilos of red meat and poultry a year, nearly triple the per capita consumption of 15 years ago, while the average Chinese citizen consumes close to two and a half times more meat than he did in 1990.
This is something I feel Michael Pollan and disciples in the U.S. often ignore when promoting lower-intensity food production systems - the U.S. is a major food exporter and if it exports less, that slack will have to be picked up elsewhere in the world. See my comments at U.S. Food Policy for one discussion along these lines.

I was interested to learn that the much-maligned (by Pollan and others) corn-and-soy diet may also be a culprit in increasing livestock emissions:
The owners of the Stonyfield Farm in Vermont found they could improve health and boost milk production in the herds, and reduce methane emissions, by eliminating the soybean- and corn-based feed that became popular during the bumper harvests of the Green Revolution. Instead, they give their cows old-fashioned flax and alfalfa, which are packed with nutrients and benign fatty acids.
Sounds win-win. Overall, greening meat is one of many things that will have to be part of the climate change solution for agriculture, which along with deforestation (for which ag is largely responsible) contributes ~30% of global GHG emissions today, as well as a number of other environmental problems.

Romm vs. Lomborg on climate change adaptation

In the WSJ, Bjorn Lomborg thinks a "technology-led effort" featuring adaptation and geo-engineering will be more effective than high carbon taxes to reduce emissions, and he cites a number of studies supporting his position. For example
Taking a variety of natural, so-called market adaptations into account, the Carraro research shows we will acclimatize to the negative impacts of global warming and exploit the positive changes, actually creating 0.1% increase in GDP in 2100 among the member countries of the Organization for Economic Cooperation and Development. In poor countries, market adaptation will reduce climate change-related losses to 2.9% of GDP. This remains a significant, negative effect. The real challenge of global warming lies in tackling its impact on the Third World. Yet adaptation has other positive benefits. If we prepare societies for more ferocious hurricanes in the future, we also help them to cope better with today's extreme weather.
... and...
Remarkably, Mr. Bickel finds that about $9 billion spent developing this so-called marine cloud whitening technology might be able to cancel out this century's global warming. The benefits—from preventing the temperature increase—would add up to about $20 trillion.
As I've said before, the potential unintended consequences of geo-engineering freak me out. As for adaptation, Joe Romm is scornful of the "adaptation trap":
What is the cost of “adaptation”? It is almost incalculable. The word is a virtually meaningless euphemism in the context of catastrophic global warming. That is what the deniers and delayers simply don’t understand. On our current emissions path, the country and the world faces faces multiple catastrophes, including:

  • Staggeringly high temperature rise, especially over land — some 10°F over much of the United States
  • Sea level rise of 5 feet, rising some 6 to 12 inches (or more) each decade thereafter
  • Permanent Dust Bowls over the U.S. SW and many other heavily populated regions around the globe
  • Massive species loss on land and sea — 50% or more of all life
  • Unexpected impacts — the fearsome “unknown unknowns”
  • More severe hurricanes — especially in the Gulf
He then uses Hurricane Katrina as an example of the huge challenges of adaptation (and, commendably, doesn't fall into the enticing but superficial "global warming caused Katrina" meme). He concludes:
If we won’t adapt to the realities of having one city below sea level in hurricane alley, what are the chances we are going to adapt to the realities of having all our great Gulf and Atlantic Coast cities at risk for the same fate as New Orleans — since sea level from climate change will ultimately put many cities, like Miami, below sea level?
I don't know the answer here - these are both smart guys who care passionately about finding the right solution to a major global issue. My hunch is that geo-engineering will not provide us with a simple silver bullet, and that the collective action problem will likely end up with temperatures rising and adaptation necessary to some degree. But that is not an excuse to junk all attempts to moderate our emissions by introducing a price on carbon (shorthand for all GHGs) that harnesses the power of markets as an ally. In this fight we need all the allies we can get.

Update: In a guest rebuttal at Climate Progress (cleverly titled "The Bjorn Irrelevancy"), Dr. Bill Chameides, dean of the Nicholas School of the Environment at Duke, dissects Lomborg's argument and accuses him of cherry-picking only those forecasts and research results which support his point.

Would a refined products embargo let Iran reduce fuel subsidies?

A few weeks ago I posted a few times on the proposed embargo on refined product imports on Iran (here, here, here) with the help of a knowledgeable friend; that friend now passes on an interesting rebuttal from NIAC on "Why petroleum sanctions only make things worse." The highlight:
A gasoline embargo actually benefits the government of Iran.

- A gasoline embargo would enable the government to eliminate burdensome subsidies and place all the blame on the United States.
- Iran has to import roughly 40 percent of its domestic gasoline consumption at market prices and then resell it at a subsidized price of about 40 cents per gallon.
- These subsidies cost the government of Iran between 10 and 20 percent of GDP, annually.[i] The Iranian government has tried several times to eliminate the subsidies, but has been stymied by popular opposition. An embargo would provide the excuse they need, and free up the government to spend the money elsewhere.
Eliminating subsidies with perfect timing would be a tricky thing to pull off - the removal of 40% of supply alone will send prices skyrocketing, which removing subsidies would only make worse. Furthermore, if sanctions were removed, the government would be hard-pressed to not reinstate the subsidies. But the opportunity is undeniably there. Yet another reason why this particular lever on Iran is probably not the best.

A $9 trillion dollar problem

This is from James Hamilton at Econbrowser, on why he doesn't buy Paul Krugman's attempt to talk down the Obama administration's new deficit forecast of $9 trillion over the next decade. Krugman says it's OK because we had a similar deficit as a % of GDP in 1945; Hamilton says they're not comparable because the vast majority of government spending was about to be ramped down dramatically, whereas our current expenses are here to stay.

The scary thing is that $9 trillion may not even be the whole story, depending on how you forecast and how you account:
Unfortunately, $9 trillion may not be the whole iceberg. Diane Lim Rogers highlights the Concord Coalition estimate that current policy would imply a cumulative $14.4 trillion deficit over the next ten years.

You also can't ignore the off-balance sheet federal liabilities, such as the $5 trillion in debt and loan guarantees from Fannie and Freddie. A quarter trillion dollars worth of those loans we've guaranteed are currently nonperforming. That's just Fannie and Freddie-- doesn't include FHA, FDIC, Federal Reserve...
Pushing liabilities off balance sheet won't work out for the government any better than it did for Enron or AIG.

Among other things, this will not help the dollar.

A Peak Oil line in the sand

Apologies for the Peak Oil overload recently, but I thought this was clever:

Peak Oilers acting on their beliefs

On the topic of Peak Oil, Ryan comments:
One frustrating thing about doomsday scenario types is that they're never wrong. It's always "just wait, it's coming." In fact, I think this is part of the appeal of following those arguments.

On a related note, the peak oilers I've talked to are so certain these problems are going to happen, yet few take big actions in response. If they really thought these problems were going to happen, wouldn't they buy a farm in Montana, spend their salary on water and food storage, invest in motorcycle companies, etc?
This is a fair point, but not all Peak Oilers suffer from this disconnect between belief and action - The Oil Drum offers believers advice on topics from employment to rainwater harvesting to survival plans for the rich and the not-so-rich in the post-apocalyptic, post-petroleum world.

First U.S. refinery since 1976

Not built quite yet, but well on its way through the permitting guantlet:
The Hyperion Energy Center was issued its air permit Thursday by the South Dakota Board of Minerals and the Environment, a major step toward this project becoming the first new oil refinery to be constructed in the United States since 1976. The board voted unanimously, 9-0.
At first South Dakota appears a bizarre location for a refinery - doubly land-locked, and not particularly near any domestic demand centers either. This one is all about the Canadian oil sands.
"In terms of supply and demand, we're still importing more oil and refined products than we should from outside North America. The need for additional heavy refining capacity is there, and we've always believed North American oil should stay in North America," Phillips said. "Canada is currently the largest exporting country to the United States, and it is in both countries' best interests to create strategic and economic synergies."
The is a testament to the confidence refiners have in the oil sands as a source of supply going forward - in general the refining industry is facing overcapacity and terrible margins, so it's striking that someone would choose to build a new refinery now (although the capacity is not specified, so could be tiny).

On the topic of oil sands, which are not as dirty as people think and I believe should be a major mitigator of Peak Oil fears, here's a story with some interesting details at The Oil Drum. This is obviously PR, but I was nevertheless impressed by this photo of an oil sands mine in the "intermediate stage" of reclamation:

The latest Peak Oil spat

A reader has asked for me to weigh in on the recent Peak Oil spat; in truth I was meaning to do so, but the commentary has piled up and I felt increasingly intimidated by the task of commenting on it. But here's an attempt at a quick synopsis:

To warm up, on Monday, Daniel Yergin (author of The Prize, the best book about oil I've ever read) wrote a piece in FP saying basically that Peak Oil fears are overblown because the combined response of technology and demand will adjust the world to declining conventional supply.

Then, main provocateur Michael Lynch published an NYT op ed calling Peak Oil "a waste of energy" and making the aggressive claim that oil is destined for $30/bbl in the long term.

The response was quick and furious; not one but two point-by-point rebuttals from The Oil Drum, as well as one by Morgan Downey (the author of the best book about oil I haven't finished reading yet, Oil 101 - I got diverted but it has received great reviews from very credible sources). And from the complete other end of the spectrum, Climate Progress took Lynch to task, going so far as to offer a bet:
Here’s my bet to Lynch. Let’s take the average price of oil from 2010 to 2015. For every $1 a barrel it is below $40, I’ll pay you $200, if you pay me a mere $100 for every $1 a barrel it is above $40.

That should be a no-brainer since I am giving him 2-to-1 and spotting him $10 a barrel off of what he says the right price is.
As I've mentioned before, I fall somewhere in the middle - I think $30/bbl is implausible, but the combination of 1), massive unconventional reserves (oil sands in Canada and Venezuela, deepwater in Brazil and who knows where else) that can be produced at a cost around $50-100/bbl, and 2), the power of high prices to destroy demand and incentivize development of alternative energy sources makes it unlikely that prices will settle much higher than $100/bbl in the next decade. Now, there may be volatility and prices spikes driven by supply shocks - we may have one coming, in fact, as the current recession has slammed exploration capex - but these will only last as long as it takes to deploy additional capital like it was deployed in 2007/2008.

(There is the chance that major geopolitical chaos could result in sustained higher prices, but that isn't the mechanism Peak Oilers are betting on.)

Peak Oil is many things - a mathematical tautology, an effective gimmick:
But regardless of the holes in Hubbert’s theory, peak oil, the gimmick, still serves to remind us that some day the oil will be gone, out of our reach, or most likely of all, extraordinarily expensive. Peak oil, as a way of understanding the real costs–political, economic, environmental–embedded in oil production regardless of the day’s market price per barrel, needs to live on.
... but I do not see it as a rigorous analytical argument that justifies energy alarmism in the short term.

Dollar devaluation and energy

Environmental Capital and Green Sheet pick up on what is in my opinion the least interesting part of Geoff Styles' recent piece on "Deficits, Dollars, and the Price of Energy." Obviously if the dollar falls, the price of all globally traded goods get more expensive from a U.S. perspective, not just oil.

I left a comment on what I feel is a much more interesting line of discussion:
I agree that “higher oil prices don't automatically make alternative energy more competitive,” but I’m not sure that’s the lesson we should draw from 2006-2008. Obviously a weaker dollar makes all global commodities more expensive from a U.S. perspective, not just oil, but the 2006-2008 commodities bubble was driven by more than just a weakening dollar. (Growing demand, higher-cost marginal supply, maybe speculation, take your pick, but major commodities went up far more than the dollar fell.)

If we take the example of biofuels, at $140/bbl crude the value of ethanol as fuel was well above the cash cost of corn, so corn ethanol made economic sense (although most of the value was captured by the growers as corn started pricing off its value-in-use as fuel). Similarly, higher natgas prices meant higher power prices and better economics for wind and solar. Overall higher crude prices did make alternative energy more competitive in 2006-2008, which is why we saw a lot of investment inflow and subsequent collapse (although the credit crisis didn’t help).

I whole-heartedly agree that a sincere call for fiscal discipline – from either side of the aisle – would be a most welcome step in Washington.
Amen to fiscal discipline. Rather than just link to this two posts in a row, I'll post the graph here this time:

Update: Discussion with Geoff in the comments, starting with his response:

I'm not sure that a large influx of investment into a sector is a good indicator that it's economically competitive. Take ethanol. By the end of June '08, just before oil prices peaked at $145/bbl, the "crush spread" gross margin on turning corn into ethanol had fallen below $0.50/gal, half its value of a year earlier, despite wholesale gasoline prices having risen more than a buck in the meantime. Higher energy prices drove up the cost of corn's inputs, just as competition for corn to put into ethanol plants pushed up its price, destroying the margin available. If you look at what's happened to the ethanol industry since then, in retrospect it appears to have been in as much of a bubble as real estate.
I disagree on ethanol - the "end-to-end" economics of corn ethanol were good in June '08, the value was just captured by the corn growers rather than the ethanol refiners/blenders due to supply-demand dynamics.

Energy prices drove up fertilizer and fuel input costs, but total corn production costs were well below market price in June '08 (since some input costs - e.g. seed, agrochemicals, labor - are not strongly energy-linked). The supply/demand dynamics were in favor of the feedstock suppliers, so corn growers captured great margins, while as you said the margins for ethanol refiners/blenders weren't great.

Things have crashed since then, but if high oil prices return and capital is available, I think the integrated economics of biofuels will start to look pretty attractive once again (although that's no guarantee that any particular step in the value chain will make big money).
That may well be, but it's small consolation for all the ethanol firms that went bust. Investors tend to remember things like that.

At the same time it strikes me that the end-to-end economics only matter if the industry has many fully-integrated firms. Oil does; biofuels doesn't. If there's no way for the ethanol distiller to capture any of the upstream margin, he can't pay out his investment in plant and equipment. That argues for a structure more like tolling agreements, in which the grain farmers bear more of the downstream risk, but why would they wish to do that?
I tend to think that if the end-to-end economics are good, the market will figure out how to take advantage at some point, barring any unusual barriers. Not sure whether it will be refiners integrating upstream, the ADM's of the world integrating downstream, the pricing mechanism shifting to reward distillers more, or second-gen breakthroughs that allow the use of cheaper feedstocks, or something else I haven't even thought of... but I don't see the barriers that would stop this from happening if the price of oil were sustained well above the cost of biofuel feedstock and production.

Different math on Cash for Clunkers

In response to those who say that Cash for Clunkers was way too expensive as a way to reduce carbon emissions, Joe Romm has a different way of running the numbers:
Let’s assume the new cars are driven nearly 20% more over the next 5 years, and that the average price of gasoline over the next five years is $3.50. Then we’re “only” saving 140 million gallons a year or roughly $500 million a year. The $3 billion program “pays for itself” in oil savings in 6 years. And most of that oil savings is money that would have left the country, so it is a (small) secondary stimulus.

Using a rough estimate of 25 pounds of CO2 per gallon of gas (full lifecycle emissions), then we’re saving over 1.5 million metric tons of CO2 per year — and all of the ancillary urban air pollutants from those clunkers — for free.
On one hand, I see his point; on the other hand, using this logic, any cash transfer from the government to the population could be considered "a stimulus," absolving the government of any mandate to be cost-effective with its programs. Since this particular "stimulus" pays out gradually over the course of six years, its relevance to the current recession is basically zero. So in conclusion, this isn't the kind of fiscal responsibility I'd like to see the government displaying given the current budget outlook.

Amory Lovins, George W. Bush, and the Valley of Death

“The commitment to a long-term coal economy many times the scale of today’s makes the doubling of atmospheric carbon dioxide concentration early in the next century virtually unavoidable, with the prospect then or soon thereafter of substantial and perhaps irreversible changes in global climate.”
That was Amory Lovins... in 1977.

From a long and interesting Atlantic article on climate change and energy, which concludes with rhetorical elegance that
The key to our energy future lies in exploiting two often opposing forces without having them trample or undermine each other: Silicon Valley’s free-market culture of innovation and Washington’s power to set the terms by which everyone operates.
OK, true, but not particularly specific or helpful. The article does show an appreciation for the difficulty of applying the VC model to renewable energy beyond demonstration scale:
The nature of venture-capital investing, which involves placing many bets in the hope that a few pay off, helped create today’s array of clean technologies. But venture capitalists have been unable to replicate the explosion of growth in the Internet sector, because they aren’t big enough to compete in the $5 trillion U.S. energy market. Google required only $25 million in venture capital to become the company it is today. A large wind or solar facility can cost upwards of $500 million just to get started. “When you’re talking power infrastructure, you’re talking thousands of tons of steel and glass and giant turbines,” says Peter Le Lièvre, the co-founder of Ausra. “All the investors in Silicon Valley combined cannot put $500 million into a project.”

This poses a problem. Venture capitalists can bring an idea from the lab to pilot scale. But sooner or later the limitations of their balance sheets kick in. Many start-ups have made it this far only to die searching for additional financing. Venture capitalists have a term for this. They call it the “Valley of Death.”
This is very true, most noticeably in biofuels where second-generation technology is having monumental difficulties securing funding to build at commercial scale.

Finally, an offbeat fact that made me smile:
Though it will have to compete for space in his obituary, George W. Bush, encouraged by Texas businessmen, signed what is regarded as a model renewable-energy standard while governor of Texas, in 1999; Texas easily beat it and now produces more wind power than Denmark.
Who knew?

The definition of "dumping"

I always thought "dumping" was something American steelmakers made up to push for tariffs when their Chinese counterparts started kicking their butts on cost, but apparently there is a an official definition - selling products below marginal cost. To which apparently a Chinese solar panel company executive who speaks fluent English admitted, before backpedaling rapidly.

Makes a lot of sense. You learn something new every day.

Hungry China

China's voracious appetite for resources continues unabated: securing a $41bn natural gas deal in Australia, restarting oil exploration in São Tome and Principe off the West African coast, and apparently even hoarding rare earth metals.

Update: Apparently the China doesn't have a complete monopoly on rare earth metals, as the linked article suggested - a California mine appears to be reopening and other potential sites and Canada and Australia are being investigated.

Obama is not Jesus

That's not exactly what he says, but Dave Roberts has a blunt and un-PC message for formerly-starry-eyed, now-disappointed progressives about Obama:
But let me be blunt: Barack Obama is not our magic negro. He’s not Bagger Vance.

He hasn’t come along to teach the ornery white folk the error of their ways. He’s just the president, a centrist Democrat embedded in a power structure replete with roadblocks and constraints. The president, even an extraordinarily popular president, can only do so much. Making one more speech won’t have any effect on Sens. Max Baucus (D-Mont.) or Ben Nelson (D-Neb.). It won’t reduce the money pouring from dirty energy companies into congressional coffers. It won’t change anybody’s mind at a teabagging rally or a dirty energy astroturfing event. This notion that Obama trying harder is the key to progressive success is just a siren song; it delays getting serious.
The whole post is worth a read.

Making it rain

I first heard of shooting silver iodide into the atmosphere to make it rain in China, and it didn't seem like the sort of technology that could sustainably help with water shortage (the water in the atmosphere has to come from somewhere, right?). But apparently one Idaho utility has found tangible benefits at scale:
Idaho Power, which generates much of its electricity from dams, has been using cloud seeding since 2003, at a cost of about $850,000 per year for its main program in the Payette River area, officials there said.

“We’ve found our targeting to be good, and we’ve found precipitation increases in the 7 to 9 percent range during years that were very much less than normal snowpack years,” said Shaun Parkinson, who leads the utility’s cloud seeding project and is considering expanding it.

Idaho Power believes that in the winter of 2007, its weather modification efforts added enough water to the Payette and Snake Rivers to provide an additional 50,000 megawatt-hours of electricity at one of its major hydropower complex – the equivalent of a year’s power for nearly 4,000 homes.
Nevada has just stripped rain-making from its budget, but other Western states are still pursuing it. I'm at a loss to explain scientifically why "conservation of water" doesn't make this an unsustainable solution, but clearly some people buy the empirical results.

Apparently there is still skepticism in the scientific community over weather rain-making works, but in my non-scientific and anecdotal experience, the technology definitely works.

Biofuels Quote of the Day

"I don't believe there's a man, woman or child who believes the industry can hit" the EPA's 2010 biofuel blending targets, says Bill Wicker, spokesman for Sen. Jeff Bingaman of New Mexico, chairman of the Senate Energy Committee.
From a long WSJ article covering the recent troubles of the biofuels industry and in particular the sad and apparently fraudulent case of Khosla-backed Cello Energy. Cello was apparently supposed to supply 70m gallons of plant-fiber-based ethanol in 2010 (70% of the second-gen biofuels mandate) when it was discovered that their process, well, didn't actually work, and they were shipping fossil diesel instead.

Here's a graph showing investment in U.S. biofuels over time and it's not a pretty picture, particularly with second-generation biofuels not yet over the hump to commercialization.

Update: Via Environmental Capital, biofuels appear to have lost out to natural gas in the latest $300m DOE grant for alternative transport systems. CNG is a decent clean-burning transportation fuel which has successfully reached scale in a few countries (notably Argentina, Brazil, and Pakistan), but I worry that this development reflects the cheapness of gas, which is unlikely to last. But T. Boone Pickens will be happy.

Happy 150th birthday to modern oil

It was 150 years ago today that Edwin Drake struck oil near Titusville, Pennsylvania, kicking off the first oil rush and the beginning of the petroleum industry as we know it. Morgan Downey commemorates with a succinct history of modern oil production at the oil drum. As he indicates with a cheeky graphic and the name of his blog (Scarce Whales), the main use of petroleum was as a cheap lighting substitute for whale oil.

RIP Ted Kennedy

Joe Romm reviews his impressive environmental record at Grist.

Looking forward, Chris Clayton looks beyond the obvious temporary loss of the Democratic party's 60th vote in the Senate to assess an interesting potential reshuffling of Senate chairmanships which would land Blanche Lincoln of Arkansas as chairwoman of the Agriculture Committee:
It would then fall to Lincoln to chair Agriculture. It would lead to an interesting shift in philosophies from Harkin to Lincoln. Also, Arkansas press and political newspapers have been reporting that Lincoln likely will face tough opposition next year not only from Republicans, but possibly a primary opponent as well. Lincoln is likely going to have to demonstrate her rural, social-and-fiscal conservative credentials to hold her seat.
This may have a non-trivial impact on the shape of the climate bill that is feasible in the Senate, in particular how stringent the rules and accounting on agricultural offsets are (this was one of the weak points in the House bill).
Further, Lincoln also will be far more reluctant than Harkin to push potential future reductions in commodity program payments. Lincoln was a champion over the last two years for southern agriculture in attempting to block measures that would reduce direct payments or cap overall commodity payments.
As distortionary as they are, I wasn't holding my breath for agricultural subsidies to be reduced anyway.

Update: Oh, and apparently Ted Kennedy also helped create Bangladesh.

Cap-and-trade, U.S. refiners and carbon leakage

Good post and comments discussion over at Energy Outlook on the effect of cap-and-trade on U.S. oil refiners, of which I'll attempt a brief synopsis:

- Geoff judges as reasonable the scenario described by the new API-funded study on Waxman-Markey, which says that U.S. refiners will suffer under the Waxman-Markey bill because they will bear more costs than foreign refineries, becoming less competitive and losing volumes to imports.

- Commenter bartman points out that this loophole could be closed by requiring import terminals to also buy permits, and that the real danger to refineries is falling domestic consumption due to higher CAFE standards, higher gas prices and electric vehicles.

- Geoff responds that yes, but importers probably wouldn't be required to have permits for upstream and refining emissions, just combustion emissions, and that the 2% permit allocation in W-M will not cover all of U.S. refiners' direct emissions.

- bartman agrees that refiners in non-carbon-pricing jurisdictions would have a slight advantage, but most U.S. refined product imports come from Canada or Europe, which have or will soon have carbon pricing. (he also opines that climate legislation won't pass this year)

- PelinoC then adds that Canada energy firms will be worse-off (e.g. oil sands have more upstream emissions) and predicts that carbon tariffs will quickly be imposed.

I don't mind that Waxman-Markey is a back-handed gasoline tax, because I think a higher U.S. gas tax is probably a good thing and there's no way one would pass through the front door. The more I think about it, though, the more I fret about the unappealing choice between protectionism on one hand and carbon leakage on the other. A global trade war would be disastrous, but examples like this in refining show increasingly plainly that most of the benefits of cap-and-trade (not to mention many industrial jobs) could leak away if the system has holes and other countries don't follow. There's been encouraging news from China and India lately, but we are still a long way from anything that looks like a globally consistent and enforceable price on GHG emissions.

German solar power

Via FP Passport, last Thursday was a big day for solar power in Germany:
This week, two of Germany's most important solar energy projects came online -- the second biggest solar power project in the world and one of the first solar thermal "power towers." The projects are part of the country's plan to provide 20 percent of its energy through renewable sources.

Officials flicked on the switch at two of Germany's most important new solar energy sites on Thursday.
The irony, of course, is that Germany isn't very sunny. And for a while their government incentives were so high that they drove up the price of silicon around the world, worsening the economics of solar power for sunnier, poorer countries.

Now, of course, Germany is driving an massively ambitious new solar project a bit further south. The NYTimes recently enumerated the "numerous pitfalls":
...Maghreb politics, Saharan sandstorms and the risk to desert populations if their water is diverted to clean dust off solar mirrors.
but at least someone is trying to bring online solar power from a more natural location.

India and China initiate domestic climate change action

The developed world reacted with consternation to India's announcement that they would accept no greenhouse gas emissions limits from the international community, so it's great news to see that a domestic cap-and-trade system has been proposed:
India has approved in principle new trading plans centred on energy efficiency as part of efforts to shift to a greener economy to fight climate change, opening up a potential market worth more than $15 billion by 2015.
Even better, China appears to be taking its own steps in the right direction:
China's top legislature, for the first time in its history, is specifically addressing climate change with the review of a draft resolution, after hearing a report on the growing environmental problem Monday.

Ni Yuefeng, a vice-chairman of the National People's Congress (NPC) environmental and resources protection committee, said the resolution shows the NPC is taking the issue seriously. The details of the resolution are expected to be on the agenda today.

The resolution will pave the way for future environmental legislation, Yang Fuqiang, director of global climate change solutions at environmental group WWF, told China Daily Monday.
This is in fact doubly good news, as not only does it signal greater willingness by the two most populous countries to take action to control their own emissions, but it also weakens the arguments of those Americans who would protest that the U.S. "taking the lead" on emissions reduction wouldn't have any impact. Simplistic game theory says so... but luckily that doesn't appear to be holding in this case.

P.S. I was once eating dinner in Beijing when they "made it rain" (see picture with the linked article), and the results were pretty astounding - a torrential downpour kept us in the restaurant for the next three hours.

Implausible fantasy of the day

Ban Carbon Emissions, Don’t Price Them.

However, I do think cap-and-dividend has some merits... many of which are shared, incidentally, by the Waxman-Markey bill, which behaves more like cap-and-dividend than most people give it credit for (~80% of revenues are effectively rebated to consumers). The only major difference is how the dividends are allocated, a subject on which reasonable people could disagree (for example, "it's progressive" doesn't play as well with libertarians).

Note: I liked an analogous idea as a politically feasible gas tax that was proposed a few months ago.

The difficulty of behavioral change

Via Robin Hanson, people can use sunlight to cheaply disinfect water, but in Bolivia they choose not to. Why?
The leader of the study, Daniel Mausezahl, suspects a big reason for this is that lining up water bottles on your roof shows your neighbors that you aren’t rich enough to have more expensive methods of disinfecting water.
This commenter posits some alternative explanations, but I don't find the "appearing poor" explanation implausible. Changing behavior is d*$! hard, as we know from other the difficulty of capturing other "low-hanging fruit" like energy efficiency. My latest favorite example is food waste - estimates vary widely, but the consensus appears to be in the neighborhood of 40% of all food is wasted globally. That means that to increase world food production by 10% (something we will definitely have to do in the next decade, with increasing affluence changing diets and demand for biofuels growing, on top of population growth), we could either farm another ~150m hectares (an area slightly smaller than Alaska, or Mongolia), or we could reduce food waste by 15%. The numbers look to so easy on paper, and yet the opportunity is so diffused that it is nearly impossible to act on it in an impactful way.

(Same goes, by the way, for those who propose the entire earth become vegetarian - how, exactly, are you going to convince people to do that?)

Update: Speaking of the difficulty of capturing energy efficiency gains, here's a good case example - the U.S. Department of Energy.

Update 2: It really is too easy to find examples of this - here is U.S. Food Policy on the challenge of encouraging kids to drink water instead of sugary drinks. Aliza rightly calls out the challenge of aligning this campaign with the campaign to move from bottled to tap water, because bottled water is bad.

DOE awards carbon sequestration grants

“People think the elephant in the room is coal and what we’re going to do with coal,” said Michael Webber, an energy expert at the University of Texas at Austin.

“Basically,” Mr. Webber said, “this deals with the elephant in the room.”
Federal Carbon Storage Grants Awarded, at Green Inc. Here's hoping that these will help the technology evolved, but I find this quote unintentionally telling:
“As with most areas of C.C.S., new initiatives are welcome,” said Howard Herzog, a sequestration expert at Massachusetts Institute of Technology, in an e-mail message.
As far as I know, we are not even in the same neighborhood of a cost-effective solution yet.

Bobby Jindal flip-flops on high-speed rail

At Green Sheet... but this was really just an excuse to link to these outstanding videos (fans of 30 Rock will enjoy).

For those who are interested in the substance of the issue, ahem, highly-respected urban economist Ed Glaeser is skeptical, while former Economist blogger Ryan Avent is outraged at Glaeser's "unserious look." Personally, I can see it being really great in the Northeast Corridor (although who knows if it can make money - I don't think Amtrak can, and the Delta Shuttle is a highly efficient alternative for the Washington-NY-Boston pivot), and am skeptical that it would take off in car-based California, as Avent seems to imply. If you need to rent a car or hail a taxi at your destination, the economics for the traveler deteriorate pretty rapidly, especially because flights are, all things considered, pretty cheap.

Update: Via Environmental Capital, Robert Samuelson writes an op ed against in the WaPo, and Avent and Paul Krugman are all over him in microseconds. I agree with Avent that some of Samuelson's density arguments are facile (subject to The Flaw of Averages, you might say), but for all his vitriole I've yet to see him make a compelling case that the economics of U.S. high-speed rail would be attractive somewhere other than Washington to Boston.

Update 2: Tyler Cowen reviews another argument for high-speed rail and isn't swayed:
More generally, my jaw dropped when I read the denouement:
In this more comprehensive model that takes into account trivialities like regional population growth and a reality-based route, the annual benefits total $840 million compared with construction and maintenance costs of $810 million.
I'm not sure what discount rates he is using but even if we put that problem aside this screams out: don't do it. Given irreversible investment, lock-in effects, and required hurdle rates of return, this still falls into the "no" category. And that's an estimate from an advocate writing a polemic on behalf of the idea. I'm not even considering the likelihood of inflation on the cost side or the public choice problems with getting a good rather than a bad version of the project. How well has the Northeast corridor been run?

So, on high-speed rail, count me as still unconvinced. Nonetheless if you know of a good cost-benefit study, of a single rail link, not in the Northeast corridor, favoring HSR, let me know in the comments.
Update 3: Via Green Sheet, Nate Silver notes that Americans like to drive instead of flying, even when the choice is not "rational" from a financial perspective.
What does this mean for something high-speed trains? It could be either good news or bad news. If a people are driving more than they "should" because they don't like air travel, then trains could pick off quite a bit of that traffic. A "true" high-speed train from St. Louis to New York, traveling at 150 MPH, could make the journey in just under 6 hours, which is quite competitive with air travel once the additional door-to-door costs of air transit are considered (although there are some incumbent to rail travel too). And many of the hang-ups that people associate with air travel, indeed, aren't likely to transfer to rail. Train travel can often be quite comfortable, for instance, and acrophobes won't have to worry about being suspended 30,000 feet above the ground in a flying cigar box. On the other hand, if people are attached to driving for "irrational" reasons -- they find it romantic or improperly evaluate expenses like depreciation -- rail travel might not make much of a dent.

Scopes Monkey Trial for climate change

Via Environmental Capital (and basically every other news source), the U.S. Chamber of Commerce has challenged the EPA to a 21st-century Scopes Monkey Trial for the science of climate change.

Joe Romm is already on the warpath:
Who ever could have imagined that the U.S. Chamber of Commerce would publicly — and proudly — equate climate science with evolution and their denial with a belief in creationism? Time now for the the major businesses on the Chamber’s board to speak up since many of them publicly claim to support strong climate action (see here). It might also be time for advocates to start boycotting those brand-name companies if they don’t act swiftly to stop.
This will never actually happen, which is good for climate change legislation, regardless of the eventual outcome; the spectacle of a public trial would implicitly reinforce in the public's mind the alleged inconclusiveness of existing climate science (a brilliant use of framing).

The issue is a difficult one - in my mind the science underpinning the mainstream view of the ultimate effects of anthropogenic climate change is probably at 80% or 90% or 99%, but definitely not at 100%. The fact that man has contributed to global warming is more like 99% (all the circumstantial evidence points to it, we just lack the ability to create a counterfactual to prove it), but the eventual effects are still highly uncertain, particularly due to our limited understanding of nature's many feedback loops, positive and negative. I don't think an intellectually honest climate change supporter could look me in the eye and say with 100% certainty that the earth has no self-regulating feedback loops which might dampen the effects of humans on the earth's temperature. Not that we know what they are, but like a black swan, the fact that we haven't seen them doesn't prove they don't exist.

So with less than 100% certainty, what is the government to do? It boils down to the difference between science and business, in a sense. In science, something is not true until 100% proved, which can take decades, and that is OK; in business, on the other hand, decisions are made under uncertainty all the time - anyone who waited for 100% certainty would be ten steps behind his or her competitors at every turn. So the philosophical question is, should a government make policy like an objective scientist, or like a business? I would argue it's closer to the latter, but I think reasonable people can disagree on this issue in the abstract. In practice I strongly support climate change legislation in the U.S. and elsewhere in the world, because I believe there is a very high chance it is the right thing to do, but I don't profess scientific 100% certainty of this, and I don't find it morally repugnant for people to disagree with this on philosophical grounds.

Update: Ars Technica explains why putting climate change on trial is a terrible idea.
It's one thing for the Chamber to try to reopen a policy debate that has been kicked around for close to a decade and made its way all the way to the Supreme Court; it's a lobbying group, and that's more or less its job. But to suggest that a courtroom setting and media frenzy are the best way to bring some clarity to the science is ludicrous. The sort of arguments that make for good courtroom statements tend to obscure the details of science, and the specific example proposed by the Chamber clearly indicates that they do nothing for the public's understanding of science.

Of course, it may be possible that the group really is that cynical, and this is precisely the outcome it is hoping for.

I'm big time!!

First spam - a major milestone for People and Resources.

Green jobs gained, other jobs lost

Everyone loves win-win solutions, but real ones are hard to find. Turns out using energy security to sell climate change action isn't one of them, and while Van Jones and the Obama administration would love you to believe that the Green Job Revolution is, environmental regulations are double-edged. For example:
Chevron Corp. isn’t too keen on an injunction that has stopped its work upgrading its 243,000-barrel-a-day Richmond refinery in the East Bay near Berkeley, Calif. Its counterpunch? It’s all about the jobs.

Chevron has set up a YouTube channel called Over1000JobsLost. That’s a reference to the number of construction workers who lost their jobs when a state judge last month halted work on the project.

Says one mustachioed worker in the Chevron-produced video: “I’ve got a family. I’ve got four girls. I’ve got a house payment, a car payment. I was really depending on this job.” In 23 words, the now-unemployed construction worker raised the specter of foreclosure, hinted at the problematic automotive industry and gave a nod to the unemployment rate – the unholy trinity of this financial crisis.
This is a fair amount of showmanship, of course, but those job losses are real, and environmental regulations can destroy jobs (particularly in industry) as easily as it can create them. Far be it from me to hazard a guess at this point what the net effect will be; ultimately, of course, we will never know, because there are no counterfactuals in politics and the potentially measurable targets are cloaked in "create or save" accounting.

Commodity specialization in Latin America

Here's a striking stat from last week's Economist:
But the pattern of trade and investment so far reinforces the fear among some Latin Americans that China is causing the region to respecialise in commodities, as it did in the 19th century, to the detriment of industry. While China’s exports to the region span a wide range of manufactured goods, its imports are highly concentrated in a few commodities (see chart 2). Soyabeans and iron ore account for two-thirds of Brazil’s exports to China, and crude oil for a further 10%. (By contrast, Brazil’s exports to the United States are mainly manufactures.)
If I were an aspiring economic superpower and almost 80% of my exports to my largest trading partner were three essentially raw commodities with little value-added, I'd be a little concerned. One is hard-pressed to find any examples of nations who climbed (and stayed atop) the economic ladder through commodities alone. Maybe Norway is the best example? But I feel like Norway had a lot else going for it as well. And as the Economist article points out, while "this specialisation is not necessarily damaging in itself," Latin American countries will have to find ways to improve the competitiveness of the parts of the economy that actually make widgets, rather than pulling black or green gold from the earth.

Quote of the Day

Ouch, cost of carry must be going way up.
Company Targets Bored Sailors Hoarding Oil At Sea.

Land cooling, water warming

A favorite argument of global warming skeptics is that the average temperature has fallen in the last 10 years. Which is true... but oceans are shattering records for high temperatures:
The world’s oceans this summer are the warmest on record.The National Climatic Data Center, the government agency that keeps weather records, says the average global ocean temperature in July was 62.6 degrees. That’s the hottest since record-keeping began in 1880. The previous record was set in 1998.

Meteorologists blame a combination of a natural El Nino weather pattern on top of worsening manmade global warming.
It doesn't take misleading statements to get scared about the Arctic in particular:
It’s most noticeable near the Arctic, where water temperatures are as much as 10 degrees above average.
I recall from chemistry that water has a high specific heat and thus requires more energy to warm or cool. By that high-school logic, it would seem like water is the medium we should be watching... and thus we should be worried.

Update: I didn't read through the whole post at first, so now that I have, here is my point made by a weightier figure:
Breaking heat records in water is more ominous as a sign of global warming than breaking temperature marks on land. That’s because water takes longer to heat up and doesn’t cool off as easily, said climate scientist Andrew Weaver of the University of Victoria in British Columbia.

“This is another yet really important indicator of the change that’s occurring,” Weaver said.

Cllimate change action ≠ energy security

Geoff Styles pokes the hole that's begging to be poked in the idea that action on climate change and energy security can be melded into one-and-the-same cause:
There are still cases with strongly divergent energy security and climate change implications, and a new pipeline that will deliver crude extracted from Canadian oil sands is a prime example. The US State Department's approval of this project looks entirely appropriate and sensible, even if it conflicts with the administration's emphasis on reducing greenhouse gas emissions. Like it or not--and largely because of past decisions concerning our own off-limits oil resources--Canadian oil sands have become an essential pillar of US energy security.
The Canadian oils sands are the killer example of a climate-unfriendly source of energy security, due to their proximity and abundance, and the decline of other nearby and friendly sources.
The "Alberta Clipper" pipeline of Enbridge, Inc. could eventually bring up to 800,000 barrels per day of Canadian crude oil to refineries in the US Midwest, as oil sands production in Alberta Province continues to grow. This oil would displace imports from the Middle East and West Africa, which absent oil sands are likely to grow, in spite of increasing biofuel production and higher fuel economy standards for new cars. That's because output from Mexico, our other main local supplier, is dropping sharply, while higher production from Brazil may only offset declines in Venezuela, which has grossly mismanaged its oil sector.
Styles also reinforces the point that oil sands are not much dirtier than other kinds of oil:
The main concern cited about oil sands relates to its higher emissions of greenhouse gases, compared to conventional oil production. This is indisputable, though it's important to put those higher emissions into perspective, while also recognizing that technology and an increased Canadian emphasis on these emissions should reduce this disparity over time. The most recent study I've seen on the subject indicates that although the processes for producing useful liquids from Canadian oil sands result in roughly three times the upstream greenhouse gas emissions of the average barrel of US supply, the well-to-wheels lifecycle emissions are only 17% higher than average. In either case, most of the emissions from oil occur when it is burned in vehicles or other end-uses, not during production.
Finally, he points out rightly that our future reliance on oil sands is a direct consequence of policies aimed at preserving the environment (in America):
Greenhouse gas emissions aren't the only environmental impact associated with oil sands, but we lack any reasonable or consistent way to assess the trade-off between the others and the potential impacts--physical or aesthetic--of increasing our own oil production from the significant resources we have placed off-limits to exploitation, including the Arctic National Wildlife Refuge and the outer continental shelves of California and other states. In effect, American policy makers and consumers have implicitly chosen to ramp up oil output in Alberta to spare other areas of greater concern to American voters.
We have effectively outsourced our environmental impact, but rather than to developing countries, to our neighbor to the north. There is not a clear consensus framework for how these trade-offs should be assessed, but at the very least it is productive that they be recognized.

Overall, the point is that using energy independence to sell climate action is a seemingly attractive but flawed strategy. This is not to say that climate change action wouldn't contribute to other kinds of national security, but beware that if your starting point and stated goal is "weaning the U.S. off of Middle Eastern oil", climate-friendly policies are not necessarily what come out the other end.

Traces of GMO halt US-EU soy trade

It doesn't take export bans to throw a wrench in the smooth workings of the world food market:
European trade sources said US soya shipments to Spain and Germany were found to have traces of GMO maize varieties which are prohibited in the EU.

Mattias Sundholm told the Reuters news agency: "The shipments have been rejected at the EU borders, and have been consigned and recalled when already on the market within the EU, unless they have already been consumed."

The US Grain and Feed Trade Association estimates that 200,000 tonnes of US soya had been denied entry to the EU, by mid-July. Given the uncertainty, international traders have ceased all further shipments.

This has raised concerns about supplies of key feed ingredients for European livestock.
A simple mistake (or was it?) has the potential to disrupt the flow in a way that has systemic consequences, which is worth bearing in mind when thinking about the future of where food will be produced vs. consumed. It's easy to dismiss food self-sufficiency schemes in a globalized world, but the past two years have shown us how rapidly trade can break down, and that caution is warranted.

A different timeline for commercializing second-gen biofuels

In the NYT:
With the twin goals of making fuel from algae and reducing emissions of heat-trapping gases, a start-up company co-founded by a Colorado State University professor recently introduced a strain of algae that loves carbon dioxide into a water tank next to a natural gas processing plant. The water is already green-tinged with life.

The Southern Utes, one of the nation’s wealthiest American Indian communities thanks to its energy and real-estate investments, is a major investor in the professor’s company. It hopes to gain a toehold in what tribal leaders believe could be the next billion-dollar energy boom.
Long-heralded as the innovation around the corner which will make biofuels actually good for the earth, second-generation biofuels have struggled to make the jump from demonstration plants to commercial scale. Among the difficult hurdles is the return that private investors would have to expect to justify a large capital expenditure with a high degree of associated risk. One potential solution? Find capital from partners with different metrics and timelines:
The Colorado State professor, Bryan Willson, who teaches mechanical engineering and is a co-founder of the three-year-old company Solix Biofuels, said working with the Southern Utes on their land afforded his company advantages that would have been impossible in mainstream corporate America. The tribe contributed almost one-third of the $20 million in capital raised by Solix, free use of land and more than $1 million in equipment.

“If you’re going with strict venture capital, they’re looking for a blistering return on capital in three to five years,” Dr. Willson said. “The Utes have a very long economic view. They’re making decisions now for future generations as opposed to the next quarter, and that is just fundamentally different.”
In theory this is the perfect match, and this sounds very promising. The hard part will of course be finding other chunks of capital which aren't looking for what those crazy business folks consider to be a good return on investment.

The WRONG way to advocate climate action

Via Green Sheet, Greenpeace executive director Gert Leipold gets embarrassed by the BBC for a misleading press release (which claimed Arctic ice would melt by 2030). Or rather, he should have been embarrassed, but instead, shockingly, stood by Greenpeace's action:
On July 15th, Greenpeace put out a press release saying the arctic ice caps would melt by 2030, a claim that Leipold now admits is false. Rather than own up, and say it was a mistake and he'd never let it happen again, he says Greenpeace is "a pressure group" that has to "emotionalize issues, and we're not ashamed" of it.
This is truly terrible - granted the other side isn't playing fair either, and it's extremely difficult to mobilize political support for hard decisions which cost now to avoid train wrecks decades down the road, but this is simply the wrong way to go about it. Even if I put my quaint personal beliefs about the primacy of intellectual honesty aside, such a mis-statement was bound to be scrutinized and uncovered, and once that happens it damages any aura of credibility that serious climate scientists and advocates have painstakingly built up over decades of careful scientific research and public communication. Greenpeace stands rightfully accused of "undermining the whole climate change movement."

You just know the coal, oil and ag anti-climate lobbies are rubbing their hands gleefully over this.

Update: Maybe I have judged too quickly and harshly - at Green Inc., the original statement may have been intended to refer to sea ice only. But that absolutely does not excuse the principle of Leipold's response.

The autistic macroeconomist

Tyler Cowen is a huge fan of Scott Sumner's blog, but despite this golden endorsement I don't read him regularly because his posts are long and technical and macro is not my passion. But here Sumner reviews Cowen's excellent new book (highly recommended, by the way - I thought it was a truly path-breaking work that could materially change society's view of autism over time), and veers off on a fascinating tangent.

For context, Sumner believes that he, like Cowen, displays some strong characteristics of the autistic cognitive style (again, read the book). The operative principle in this particular case is that autistic people are less likely to be swayed by what behavioral economists call "framing effects" (and Naseem Taleb refers to derisively as "narratives").
Cowen pointed out that autistic people often seem to act more like a rational “economic man” than the non-autistic. They are less swayed by framing effects and also less swayed by emotions such as envy and revenge, which can be counterproductive. I always thought it was obvious that it was better to get a 5% real wage increase, when all your colleagues got 10%, then to get a mere 4% real wage increase when all your colleagues got 2%. But as I got older I realized most people don’t look at things that way. The world is not full of characters like “Spock” on Star Trek.
I won't paraphrase Sumner's wonky build-up around coin collecting and monetary economics and NGDP (his post is worth reading in full), but here's the kicker:
I believe that the financial crisis of 2008 was the mother of all frame jobs. The commercial bankers were framed, when it was really the central bankers that created the severe recession.

Over the past few months I have rolled out one quotation after another, trying to show that if one believes the logic of modern macroeconomics, the implications are clear. Fed policy was effectively highly contractionary, and a more expansionary policy could have prevented the sharp fall in NGDP. And there is no evidence that the fall in RGDP is anything more than what one would expect from this sort of monetary policy failure.

So why am I not making any headway? Because the post-Lehman crash was a very powerful framing device. It’s a great story.
That stopped me in my tracks, because it is so true. The fall of Lehman is such a powerfully compelling narrative, and most of us are so drawn to narratives, that it is difficult to dislodge from either our minds or the public discourse once it's taken hold. But what if, 10 or 50 or 100 years from now, dispassionate (autistic?) macroeconomists - or alien archaeologists and economic historians, for that matter - marvel at how the powerful narrative of the credit crisis blinded us to the mundane economic reality of the cause of the recession in which the world now finds itself mired?

I am still shaking my head at how original and powerful this thought is. Wow.

Algae flavor of the week

Algae is hot these days, and Green Inc. covers the latest apparent innovation:
A California start-up, Aurora Biofuels, says it has cultivated algae that doubles production of biodiesel by absorbing more than twice as much carbon dioxide as conventional strains.

According to Robert Walsh, the chief executive of the company, Aurora’s breakthrough was to develop algae mutations that can ingest carbon dioxide regardless of the intensity of sunlight.

“Algae have a built-in mechanism to be effective at low light and as it gets brighter during the day their uptake of carbon dioxide levels off,” said Mr. Walsh. “We’ve been able to go in and alter strains by natural mutation to cause the algae to deal with light across the whole spectrum. The algae continue to uptake CO2 through brighter light and are more productive.”

He said Aurora has built a pilot facility “between a 7-Eleven and the beach” near Melbourne, Fla., and that for the past several months the new algae strains have been producing a gallon of biodiesel a day in an Olympic pool-sized pond.
I'm not trying to be overly harsh, but that doesn't sound like a very good yield. There are about 42 gallons in a barrel, which means this technology would appear to need 40 Olympic pool-sized ponds to produce 1 barrel of biodiesel per day.
The company plans to have a demonstration plant capable of producing 1,000 gallons of fuel a day in operation by the second quarter of 2010. A full-scale production facility is to follow in 2011.
By the same math, this demonstration plant will produce <25 barrels per day. By comparison, world petroleum production is 85 million barrels per day, of which the U.S. consumes in the neighborhood of one quarter, or about one million times the size of the output of the demo plant. (To be fair, not all of these petroleum products are diesel but that's the order of magnitude.) So let me know if my back-of-the-envelope is off, but this "breakthrough" doesn't appear to get algae anywhere near where it needs to be to scale effectively.

Popular Science on the future of farming

Popular Science has a great article on the future of farming, or, more specifically, 8 innovations that could reshape the future of farming. Nothing mind-blowingly original, but I think most of them have high potential in the next decade, and Popular Science does a nice job of laying them out in a very accessible format. Here's a quick summary and commentary on the 8 innovations:
1. Farm the Desert: Greenhouses built near coasts turn plentiful seawater into freshwater for crops, without expensive desalinization plants. (I particularly like this one - imagine the potential in the Middle East, North Africa, the Pacific coast of the Americas, Australia...)

2. Growth with Precision: Networked soil sensors signal how much fertilizer and water are needed and when. (Definitely well on its way, at least in the U.S.)

3. Rebuild Rice: Genetically engineer rice to change its photosynthesis, so we can grow more of it in any conditions. (The idea of converting rice from C3 to C4 is fairly radical, but this research is underway at the IRRI in Manila)

4. Replace Fertilizer: Seeding fields with microbes that pull nitrogen from the air. (This will make Michael Pollan and other crusaders against the NPK oversimplification happy)

5. Re-Map a Continent: Gather extensive data on land use to better target new farming technologies. (Underway with the Gates foundation's $4.7m grant to HarvestChoice)

6. Use Robot Labor: Mechanized farmers for monitoring, pruning, thinning, and even picking produce. (I have a hard time seeing the labor economics of robots beating migrant workers any time soon)

7. Resurrect the Soil: Add biochar, a form of charcoal that provides plants with vital nutrients while also sequestering carbon. (Biochar is the next silver bullet on the horizon which will undoubtedly not meet expectations...)

8. Make Supercrops: Engineer the cassava into the perfect crop. (This is another one of my favorites, although I don't have a great sense for the scientific difficulty involved)
I would add at least one more, courtesy of Vaclav Smil - drastically reduce the amount of food which is wasted (estimates vary, but 30-40% losses between field and fork is very plausible). Analogous to energy efficiency, efficiency in the food chain is perhaps the most impactful (and lowest-impact from an environmental perspective) lever for meeting rising food demand. Not easy, given distributed nature of the challenge and the behavioral changes required, but nevertheless one that should be included. As Smil reminds constantly, too often we forget that increasing supply is not the only way.

Barney Frank on economists

Via Greg Mankiw:
Not for the first time, as an elected official, I envy economists. Economists have available to them, in an analytical approach, the counterfactual. Economists can explain that a given decision was the best one that could be made, because they can show what would have happened in the counterfactual situation. They can contrast what happened to what would have happened. No one has ever gotten reelected where the bumper sticker said, "It would have been worse without me." You probably can get tenure with that. But you can't win office.
So true... and you'd better believe that the associated frictions help generate sub-optimal political outcomes.

Africans in China

There's a lot of talk about China going to Africa, but the reverse is happening as well:
Based on official statistics, since 2003, the number of Africans in Guangzhou has been growing at 30-40% annually. Based on a report in the Guangzhou Daily, there might already be 100,000 in the community. They come from Nigeria, Guinea, Cameroon, Liberia, and Mali. Amongst these, Africa’s most populous country Nigeria claims first place.

They primarily live in village-districts in the city of Guangdong (like Dongpu, Dengfeng Jie, Yongping Jie). They do their business in a few large-scale China-Africa commerce malls.
Mutual trust has a lot to do with the cohesion of the community:
Africans especially trust, and depend on their fellow people; that’s why we call each other ‘brother’ and ’sister’.” Mall management Chen Lianren told the reporter that every store opened by an African becomes a focal point, and attracts many of his fellow countrymen, increasing the traffic flow for other stores in the mall. For that reason, they lowered the rent for African tenants.
I think anyone who has lived as an expat can relate to this - a compatriot you might not necessarily trust absolutely at home appears in a totally different light in a foreign setting where no one else speaks your language.
Williams and other Africans with an economic foundation all share a “Chinese Dream”. They hope that by struggling for 4-5 years, they will be able to open a trade company or service center, and make large profits from servicing the rapidly growing Chinese-African trade. Based on published research, more than 20,000 Africans are long-term residents in Guangzhou (more than six months).
That the pull is economic is not surprising to me, but the magnitude is. I guess if motivations are economic, totally understandable why one would pick China over Europe or the U.S.

Via MR.