Business & Technology

Capture the eco flag

The specs and the dish on the 2010 third generation Prius

UPDATE: This story was changed to reflect updated EPA mileage estimates. Photo courtesy of Toyota. Toyota’s newest hybrid is almost here. Last week, the car company invited a group of journalists and bloggers to the third generation Prius preview in Napa, Calif. The deal was we could road test the 2010 model to our heart’s content, but we needed to stay mum about our impressions of the car and mileage readings until the end of March. Sigh. So I have been figuratively bound and gagged, but the Toyota folks did provide more detailed technical specs than those announced in January …

Eco:nomics: green color blindness

In the face of all evidence, some folks just can't see green as anything but a cost

It's always difficult to write (non-boring) posts on conferences. People come on stage, discuss wonky issues, and leave. There's rarely any "news." If people really wanted to hear my running commentary, they would do what With-It People do and follow my tweets. So, just a broad observation on today's events. One of the earliest sessions of the day was Bjorn Lomborg, delivering his increasingly ridiculous message that we have to prioritize social spending (banal) and that spending to avert climate change just doesn't pass the cost-benefit analysis test (absurd). Underlying Lomborg's nonsense is an assumption so common (in some circles) that it scarcely seems worth stating explicitly, much less defending: that reducing emissions is all about immediate economic costs and nebulous, distant social benefits. The question is always, do the nebulous distant benefits justify the immediate economic costs? This mindset informed virtually all the questions the moderators asked (with the exception of Jeffrey Ball, who's very sharp). With every business or policy proposal, it was, what about the cost? Will people pay the cost? Can we afford the cost during a recession? The one-track-mindedness reached comic proportions a few times. Right after Lomborg, architect William McDonough came out, told a few stories of saving companies millions of dollars, then built his way in a poetic reverie on buildings that could be like trees, fecund and regenerative. WSJ's Kimberly Strassel paused, and then, I kid you not: "But what about the cost?" Jaybus. I mean, A, how about having more than one thought, and B, he just told you he saved these companies millions of dollars. S-A-V-E-D. That like ... un-cost. When WSJ's Alan Murray was interviewing Amory Lovins, he just kept repeating incredulously, "but what about the trade-offs?" "Trade-off" is code for the notion that any environmental improvement comes at economic expense. Lovins, meanwhile, was talking about building super-efficient buildings at under average cost. He was repeating, as he has so many times, that saving energy (and cutting emissions) is cheaper than buying it. I don't know why people who were cheerleaders for an utterly pointless $3 trillion war and hundreds of billions of dollars of Wall Street bailouts suddenly become obsessive-compulsive bean counters when it comes to, oh, improving public health or saving our grandchildren from untold misery, but if you're going to count the beans, count the fracking beans. This is the second year I've been at this conference. CEO after CEO talks about making big investments and getting even bigger returns. I have not seen or met a single businessperson who has done this stuff and says anything but, "I'm glad we did it, it paid off bigger than we thought it would, it energized my employees, it absolutely makes business sense." The only people I've seen say anything negative about greening efforts are people like Michael Morris who have resisted making them. Why, in the face of this torrent of evidence, do some folks fail to see the profitable emission reduction strategies in front of them? Lovins later asked Gore, somewhat plaintively, "how can we change the conversation from sacrifices and costs to opportunities, jobs, and savings?" I wish I knew. It's a peculiar sort of malady, like color blindness or something.

Eco:nomics: Mulally tales

Ford Motor Co. CEO says everything's going to be juuust fine

Ford Motor Co. CEO Alan Mulally. The kick-off discussion here at Eco:nomics was with Ford Motor Co. CEO Alan Mulally. (Which you'd know if you were following my tweeteriffic tweets!) Last year's kick-off session was with GE CEO Jeffrey Immelt, who was 50 percent drunk and 100 percent entertaining -- frank, blunt, and occasionally profane. The contrast this time around could not have been more stark. Mulally, looking like Mr. Rogers in his sleeveless red sweater vest, murmured the corporate line in soothing tones, assuring us all that Ford is great, its new goal is to make great cars that get greater every year, and that the future is great, also filled with greatness. He's got that lilting PR voice that releases your endorphins, but afterwards you can't remember a thing he said, except about how everything is great. For instance, he answered a question about California's fuel efficiency waiver with a torrent of won't-you-be-my-neighbor filler that you had to concentrate on really hard to realize that he, just like the other Big Auto executives, opposes granting it. The answer, basically, was "we don't want to have to make make cars to meet two standards, even though we're already making our cars more fuel efficient every year." Well, why not make them fuel efficient enough to meet the stronger standard? Then you only have to meet one. Nothing Mulally said would begin to explain why Ford's valuation is tanking. Talking about the future, it was clear that although Mulally sees some ethanol and electric cars in the mix, his true love and focus is the internal combustion engine, which he said Ford engineers could improve by 20-30 percent efficiency. He said ICEs will be the dominant vehicle technology for at least the next 10-15 years. Compact disc manufacturers are probably saying the same thing. A couple of notable moments from the audience Q&A: T. Boone Pickens got up and asked him about making cars that run on natural gas -- for "energy independence," you know. Mulally was polite, but basically said, um, no. That's dumb fracking idea and nobody wants those cars. It was pretty hilarious. Another man got up and said that Ford had basically lost his whole generation. Mulally said, "I want to come up to your room later." I know the car companies are desperate, but I didn't know their executive were literally prostituting themselves! Anyway, it was largely a nothingburger with happy talk sauce. Pretty much what you'd expect from an American auto company. Meanwhile, later in the evening I ran into Bill Gross of IdeaLab, who took me out to the parking lot to show me this: That's the Aptera, a safety tested, super streamlined, fully electric two-seater, made entirely of carbon fiber, with a 100-mile range. (Tons more pictures here.) It will soon be available in California for $30,000. It's what car companies make when they're innovating instead of lobbying.

Notable quotable

Sierra Club partners up to make green … luggage?

"We look forward to increasing the presence of eco-friendly travel and accessories in the luggage and travel industries." -- Johanna O'Kelley, director of licensing for the Sierra Club, on the organization's new partnership with Ricardo Beverly Hills


Your intrepid blogger heads to yet another green conference; promises to twitter some tweets

I'm at the airport, getting ready to head out to Santa Barbara for the second annual Wall Street Journal Eco:nomics conference. (Yes, flying on planes makes me a big fat hypocrite earthf*cker -- I eagerly await my NYT profile.) The WSJ conference is interesting, mainly due to the contrasting influences of the top-notch WSJ news team and the WSJ editorial board, world headquarters for unrepentant far-right fruitcakes. So you get Al Gore and Amory Lovins, but then you also get Bjorn Lomborg and Vaclav Klaus. (Klaus gets the last word, with his session titled "Global Reality Check: From Europe to China to the U.S., how realistic is a big green push amid an imploding economy?" Anybody care to guess his answer in advance?) In between you have an interesting mix of truly innovative and green-minded business leaders and ... business leaders primarily concerned with positioning themselves to profit from whatever happens next. Thus you get sessions like the hilariously titled, "Power Play: What will keep the lights on: nuclear energy or 'clean coal'?" Whee! The really big news here -- and you'll want to notify all your friends and family about this ASAP -- is that I'll be twittering from the conference. OMG! you say. OMFG! you add. Yes, it's true. I'll be delving into the brave new world of 2008, because clearly the main flaws of blogging are its excessive length, depth, and grammatical exactitude! I don't even know enough about Twitter to tell you how to follow my twittering. But if you happen to know how, it's all going on under the name david_h_roberts. Again: david_h_roberts. Feel the Future! [Note from more tech-savvy editor: David's Twitter feed is here. And right below.]

A concentrating solar breakthrough

Sheer number of solar advancements suggests that cheap solar electricity is coming soon

Concentrating solar power is a well-known approach to lowering the cost of solar electricity. You focus sunlight from a large area onto a small one, the same way a magnifying glass can set a piece of newspaper on fire, using one small, high-quality solar cell and a concentrator for a lower total cost than hundreds of slightly cheaper cells. (Or you can use the concentrated heat to drive a heat engine, but not in the example we are about to discuss.) Morgan Solar has a smart variation on this under development. They start with a clever acrylic concentrator that uses pure optical guiding to concentrate solar energy about 50 times, around the same results as a Fresnel lens, but without the need for curves or a non-zero focus. This already moderately concentrated solar is then concentrated further by a much smaller glass concentrator that also needs no air gap. Because neither concentrator requires an air gap, a tiny solar cell is attached directly to the glass. So you have an eight-inch acrylic concentrator, a glass concentrator the size of an American nickel, and a solar cell the size of a baby's thumbnail.

Algal biodiesel -- also a magic pony

High energy requirements make the manufacture of algal biofuel prohibitive

Robert Rapier has an important post on the prospects for algal biodiesel:

Environmental interests vs. environmental advocates

South Carolina misses an opportunity for energy efficiency with Duke's Save-A-Watt program

I recently interviewed a guy who explained his approach to long-term contracting to me as follows: "always structure your contracts to ensure that your counter-party makes money, and you'll never have a bad contract negotiation." It's a great point, too often lost by those who are convinced that all negotiations are zero-sum games. Lest one think that hard-nosed, selfish negotiating is limited to greedy financial types, I bring you this story from South Carolina, where a change in utility regulation to incentivize energy efficiency was blocked by environmentalists and consumer advocates on the grounds that it would give too much money to utilities. It seems to me that they have made a big mistake. Regulated utilities have no incentive to invest in energy conservation or generation efficiency. Moreover, they have no incentive to encourage their customers to make investments that would save them money, since the standard guaranteed-return + cost-pass-through pricing model doesn't let them keep the gain. This doesn't make utility managers bad guys; it just means that they are responding to a bad set of signals. If your parents give your big brother a cookie every time he punches you, your big brother is not entirely to blame for the welts on your arm. Jim Rogers knows this, and proposed his Save-A-Watt program to give his company, Duke Energy, a financial incentive to encourage their customers to conserve. Consumer advocates and environmentalists opposed, broadly on the basis that we shouldn't pay utilities to do things they're supposed to do anyway. The South Carolina utility commission agreed: ... they objected specifically to the heart of the plan: Duke's request to get a financial return for power plants it doesn't have to build. To be quite clear, Duke has many flaws. They like expensive coal plants. They've tried to do some things that look an awful lot like gaming carbon markets. And they are a card-carrying, dues-paying member of the BS-machine that is ACCCE. But that doesn't mean we can't give them credit for trying to reform the rules, so that they can sever (however partially) the disconnect between the interests of their shareholders and their customers (not to mention the environment). It seems a shame to me that those efforts were blocked in the name of the environment and consumer. Ultimately, this issue is much bigger than Save-a-Watt, Duke, and South Carolina. Our regulatory system desperately needs reform, and effective reform will necessarily create massive wealth transfers away from those who benefit from the status quo. It was ever thus, and is why vested interests are always so conservative. Those who seek reform therefore have four choices:

The myth of simple market solutions

No particular policy instrument is appropriate for all environmental problems

I introduced my previous post by noting that there are several prevalent myths regarding how economists think about the environment, and I addressed the "myth of the universal market" ­-- the notion that economists believe that the market solves all problems. In response, I noted that economists recognize that in the environmental domain, perfectly functioning markets are the exception, not the rule. Governments can try to correct such market failures, for example by restricting pollutant emissions. It is to these government interventions that I turn this time. A second common myth is that economists always recommend simple market solutions for market problems. Indeed, in a variety of contexts, economists tend to search for instruments of public policy that can fix one market by introducing another. If pollution imposes large external costs, the government can establish a market for rights to emit a limited amount of that pollutant under a so-called cap-and-trade system. Such a market for tradable allowances can be expected to work well if there are many buyers and sellers, all are well informed, and the other conditions I discussed in my last posting are met. The government's role is then to enforce the rights and responsibilities of permit ownership, so that each unit of emissions is matched by the ownership of one permit. Equivalently, producers can be required to pay a tax on their emissions. Either way, the result -- in theory -- will be cost-effective pollution abatement, that is, overall abatement achieved at minimum aggregate cost. The cap-and-trade approach has much to recommend it, and can be just the right solution in some cases, but it is still a market.

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