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One last foray into the economics discussion

The guys at Environmental Economics replied to my post on economics and climate here and here. Read if you like. I would protest that "the extreme position by some environmentalists that economics is evil" has nothing to do with me or what I wrote, and that if there is some war between Environmentalism As Such and Economics As Such I want nothing to do with it, but ... feh.

I just want to make one final point, somewhat abstracted from the details of this oh-so-illuminating back and forth. In the course of decrying the pointlessness of a battle between greens and economists, Ryan Avent defends me from Tim Haab's charge that I'm an idiot:

Roberts is very smart on these issues and has a very sophisticated, and for the most part correct (in my view), outlook on carbon pricing.

First, thanks!

Now, not to look a gift horse in the mouth, but note the evidence offered that I'm not an economic philistine: I respect carbon pricing. I don't want to make too much of a passing comment, but this strikes me as endemic to these debates: the notion that when it comes to environment and energy issues, "economics" means "market-based policy" means "pricing."

This seems like a weirdly constrained use of economics to me -- reflective of the narrow range of economics visible in America's public conversation -- and it's made for a weirdly constrained debate. Economists themselves aren't necessarily guilty -- see here -- but it's true of many people arriving newly to climate/energy policy debates. They discover that Economic Science says one thing and fuzzy headed advocates say something else, so of course they want to be Sensible and side with Economic Science (don't want to get patouli on you!). Thus you get a weird kind of zealotry around pricing from people who know very little about the specifics of environmental history or regulation or technology, whereby they wildly overstate the potential of pricing and proclaim confidently that Economic Science has discredited the alternatives. (*cough*carbon tax advocates*cough)

Seems to me, though, economic thinking could go both more micro and more macro than carbon pricing.

Dutch call on green guru to open up cradle-to-cradle certification

A while back I noted Fast Company's big expose on green guru William McDonough. Despite the hype and promise around McDonough's intellectual work, it hasn't done much to change the business world, for reasons having to do with what his critics characterize as ineptitude and vanity. Specifically, his cradle-to-cradle certification process has remained jealously guarded, run only through his firm, woefully behind on assessing products and responding to requests.

Now author Danielle Sacks has a short follow-up, about a Dutch attorney and several Dutch gov't organizations pleading with McDonough to open up the C2C process, if not completely open source then at least to public-private partnerships.

It's odd. The notion of keeping this stuff jealously guarded, proprietary, and for-profit seems so counter to the spirit of McDonough's work. I can't make sense of it.

A closer look at PG&E's immensely promising solar proposal

Last Tuesday, PG&E, the second largest utility in California, announced a major new solar initiative: 250 megawatts (MW) of utility-owned, distributed generation solar, and a further 250 MW to be built by private solar developers, under fixed-price contracts, at the utility's cost of service.

This is very good news, with implications I predict will reverberate through the solar policy community for quite awhile.

First, let's take the issue of utility involvement in the distributed generation solar market. I co-wrote an article on this last fall with my colleague Kevin Fox. The upshot: utility involvement in solar brings the opportunity for new economies of scale, but can also raise concerns about the potential of monopoly power crowding out private solar developers and stifling competition. The future of solar is dependent on nurturing a competitive workforce throughout the value chain, and healthy competition to foster a robust market and bring costs down for consumers.

Our suggested cure: utility involvement in the distributed generation solar industry should be conditioned on opening access for private solar companies to provide the same value to ratepayers. On first look, PG&E's application appears to meet this standard. The program maximizes the benefits of utility involvement while minimizing the potential drawbacks.

PG&E's solar program follows on the heels of similar announcements from Southern California Edison, San Diego Gas & Electric, and Los Angeles Department of Water and Power. SCE and LADWP's approaches contained efforts to limit markets and exclude participation, and as a result have been met with robust challenges.

The second policy implication concerns discussions around feed-in tariffs. While this is not a classic feed-in tariff in that it doesn't contain a must-take element (developers will submit projects to PG&E under standard contract and prices, winners will be selected based on assessed project viability and other elements), this proposal will re-introduce the spirit of competition when discussing fixed price contracts. More on this later.

Finally, we are going to see a lot of discussion on the price. PG&E projects that its cost of service will be the equivalent of $0.246/kWh, plus time-of-delivery adder, totaling $0.295 kWh. Given that the San Francisco Public Utilities Commission just signed a contract for 5 MW at $0.235 in one of the least sunny places in California, and Austin Energy signed a 30 MW contract for a reported $0.165 c/kWh, I believe this is a case of PG&E underpromising so as to overdeliver. We'll see once they make their actual bid. In any event, it's sunny days for the California solar industry.

What is Obama’s proposed price on carbon?

This is a guest post by Chaz Teplin [ChazTeplin@gmail.com], who works at the National Renewable Energy Lab developing cheaper materials for efficient photovoltaics. His opinions are his own and do not represent the views of his employer.

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The new Obama budget is striking because a cap and trade program is specifically called out and, critically, actual numbers are offered for the revenue raised from the program.

For years environmentalists have argued over the tradeoffs between a carbon tax and cap-and-trade, but either approach, if well-implemented, forces energy users to pay a price for carbon emissions. The actual price is crucial. A high carbon price financially motivates companies and individuals to increase energy efficiency and switch to carbon-free energy sources. With a low carbon price, the incentive for change is small.

So what is the Obama carbon price?

Obama's proposed budget anticipates about $80 billion in auction revenue in 2011 (Table S-6). Starting from this figure and some reasonable assumptions, its quite simple to get an approximate carbon price. (While we can hope for dramatically reduced emissions before the first year the plan takes affect, it seems unlikely.) The Obama plan explicitly calls for auctioning off 100 percent of the emissions permits, so we can get an approximate price of a permit by dividing the $80 billion auction revenue by current U.S. emissions.

With 2006 numbers for CO2 emissions, the Obama carbon price is $14.30 per metric ton of CO2. I don't know about you, but I don't buy my energy by the ton of CO2. Here is what $14.30 per ton would do to common energy costs*:

Effect of the Obama carbon price**

• Petroleum fuels: adds 15¢/gallon
• Electricity: adds 0.8¢/kWhr (compare to 7-10¢/kWhr residential rates)
• Natural gas: adds 8¢/therm (compare to 85¢/therm residential rates)

In other words, energy prices would increase by about 10 percent. Its a start, but a very slow one.

For wind energy, the added cost to burn coal would be a small help because wind is already cost competitive. For solar, the increase in competing electricity prices would be irrelevant in comparison to existing federal subsidies. Considering the recent volatility in oil prices, I doubt many drivers would even notice the 15¢/gallon.

Of course, these numbers are just for 2011. But the Obama budget anticipates only small increases in auction revenue through 2020 and the stated goal is only to hit "14 percent below 2005 levels by 2020." Assuming this target is achieved, the Obama carbon price would remain below $20/ton.

I doubt that such small carbon price signals will significantly impact energy choices. Perhaps the administration is relying on the recessionary economy and a smaller GDP to reduce emissions.

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* Using commonly available data on the emissions intensity of various fuels and electricity generation. (Calculations available in this spreadsheet [XLS].)

** These numbers will not be exact, but they should be as close as anything else in a projected budget.

NAIOP releases disinformation study downplaying building efficiency

I was wondering when it would happen: a building sector disinformation campaign launched by vested interests.

Well it's here. The campaign hit the New York Times on Saturday, and it comes from NAIOP, the Commercial Real Estate Development Association. It appears just as the country has come to grips with the fact that buildings are responsible for over 50% (50.1% to be exact*) of all the energy consumed in the U.S. It comes at a time when Americans are trying to reshape their energy policy and wean themselves from dependence on foreign oil, dwindling natural gas reserves, and dirty conventional coal.

This disinformation campaign is obviously meant to stall, confuse, and distort. The first salvo, a spurious study (PDF) and press release, was issued two days before the Senate Energy and Natural Resources Committee held a hearing on improving building energy code standards.

It is clear from a simple analysis of the study that NAIOP commissioned a building energy efficiency analysis to support predetermined results. They contracted with ConSol, an energy modeling firm, and asked them to analyze five (yes, only five) efficiency measures for an imaginary square-shaped, four-story office building with completely sealed windows and an equal amount of un-shaded glass on all four sides of the building.

In other words, analyze an energy hog.

They conducted the analysis for different cities and climates -- Newport Beach, Chicago, and Baltimore -- without changing the design to respond to these very different climates. They did not study changing the shape of the building, its orientation or form, or redistributing windows or using different windows to take advantage of natural light for daylighting or sunlight for heating. (Office buildings are day-use facilities.) They did not study shading the glass in summertime to reduce the need for air-conditioning, using operable windows for ventilation (not even in Newport Beach with its beautiful year-round climate), using landscaping to reduce micro-climatic impacts, employing cost-effective solar hot water heating systems, employing an energy management control system, or even study the impact of using inexpensive energy saving occupancy sensors in rooms to turn off lights.

In other words, NAIOP intentionally kept out of the analysis all the readily available low-cost, no-cost, and cost-saving options to reduce a building's energy consumption. This deliberate omission is glaringly apparent in their press release and in the NYT article. In fact, they take so many inexpensive energy-saving options off the table that it is impossible for the imaginary building to reach commonly achievable energy-consumption-reduction targets. They then add an inflammatory headline to their press release -- "Results show efficiencies unable to reach 30 percent mandates" -- and state that, "The study provides an unbiased insight into the energy targets practical to commercial development today."

Using this pseudo-analysis as their baseline, NAIOP goes on to report, without any objective basis, that "reaching a 30 percent reduction above the ASHRAE standard (a commercial building energy code standard) is not feasible using common design approaches and would exceed a 10-year payback." They conclude, "achieving a 50 percent reduction above the standard is not currently reachable."

Clearly, this study is meant to confuse the public and stall meaningful legislation, insuring that America remains dependent on foreign oil, natural gas, and dirty conventional coal.

The U.S. peaked in oil production in 1970 and natural gas in 1973. Our reserves are in steep decline and 70 percent of the remaining world oil and gas reserves are located in the Middle East, an area stretching from Saudi Arabia and Iran to the Islamic republics of the former Soviet Union. This type of activity by NAIOP not only hurts our country, it is also a disservice to their membership and all those in the building sector who work hard to deliver a high-quality, energy-efficient building products.

NAIOP touts itself as advancing responsible commercial real estate development and advocating for effective public policy. This pseudo-study and misleading campaign accomplishes none of these goals.

The American public deserves better.

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* To create a U.S. Building Sector, the Residential buildings (operations) sector, Commercial buildings (operations) sector, Industrial sector-building operations estimate, and the Industrial sector-annual building construction and materials embodied energy estimate were combined.

New all-liquid battery holds promise of easy scalability and high current capacity

For the tech nerds out there, check out this intriguing article in the new Technology Review.

It's about a new kind of battery in which all the active materials are liquid (molten metals and molten salt) rather than solids. This gives it several advantages over the whole range of solid-state batteries now available. It's cheap and easily scaleable, and most importantly, it can handle very high currents. It looks like an incredibly promising solution for utility-scale storage of intermittent resources like sun and wind.

You can hear this all explained by MIT's Donald Sandoway in the nerdtastic video at the link.

As always, it's all about cost-effective scale. No sense celebrating yet. But every scrap of hopeful news on energy storage is worth sharing.

Don't treat the budget like a bill

There's been some amount of disgruntlement regarding President Barack Obama's proposed carbon cap-and-trade system, as laid out in the budget he just submitted to Congress. David really doesn't like the way the administration proposes to handle proceeds from the auction of emissions permits. Brad Plumer objects both to the "timid" emissions cuts baked into the plan as well as to the low estimate for the price of carbon under the proposed system. Meanwhile, Kevin Drum wonders why the revenue estimates are so low.

But Ezra explains it all to you: "this really seems a case where the administration is on the cutting edge of the political conversation, but the political conversation is lagging far behind the severity of the crisis."

Exactly. And the "political conversation" isn't just between Democrats and the GOP. Or between coastal Green State Dems and Midwestern Brown State Dems. Remember that Obama first had to negotiate the split between climate czar Carol Browner's support for cap-and-trade with economics adviser Larry Summers' and OMB head Peter Orzsag's support for a carbon tax. I'm not surprised that the budget stayed light on details.

What's most important are the set of basic assumptions the administration uses (and "assumption" is the right term since it's effectively Congress that designs the plan): an economy-wide carbon market. Check. Auctioning 100 percent of the permits (instead of giving some away to polluters). Check. Rebates for taxpayers. Check. Funding for renewable energy and efficiency. Check. Capping and then reducing emissions to well below 1990 levels by 2050? Check.

The fact is, it's just not wise for the administration to get too deep in the weeds on this. Ezra Klein has observed regarding health care that "the skeletal health plan outlined in [Obama]'s budget has been built to fit the work Congress is already doing on health care reform." Now I don't think you can say that there is quite the same "congressional consensus" on cap-and-trade that there is on health reform. But at least among House Democrats (and hopefully among Democratic Senators) there is an emerging consensus regarding the elements Obama has included.

On climate, how should progressives respond to the conservative strategy of 'obstruct and delay'

When I first read the E&E News PM story ($ub. req'd), "Boxer eyeing bold move to thwart GOP filibuster on emissions bill," I was skeptical of the strategy described:

The chairwoman of the Environment and Public Works Committee is considering a bold budget move aimed at passing global warming legislation in the Senate without having to deal with an expected Republican filibuster.

Sen. Barbara Boxer (D-Calif.) said that she is researching the use of the budget reconciliation process as an avenue for passing cap-and-trade legislation now considered a key agenda item for President Obama.

"We're certainly exploring it as a possibility," Boxer said of budget reconciliation, a bill that cannot be filibustered and therefore does not require meeting the 60-vote threshold that has consistently been a key hurdle to passage of global warming legislation.

After all, the climate bill will be among the consequential pieces of legislation ever considered by Congress given that failure to solve the climate problem will grievously harm the health and well-being the next 50 generations of Americans (see here). Shouldn't that issue be debated extensively?

But then I read William Kristol's Thusday op-ed, which argued Republicans need to "find reasons to obstruct and delay" (see here) Obama's agenda. I guess that's why they I call it the conservative movement stagnation.

Conservatives have no strategy for averting catastrophe. Indeed, they have chosen to tie the fate of their entire movement stagnation to humanity's self-destruction (see here). It is now taken for granted that one must get 60 votes for every piece of legislation because it is taken for granted that conservatives will filibuster anything Democrats tried to do, including trying to pass legislation aimed at preventing the unimaginable horror of 5.5° to 7°C warming and 850 ppm.

I still think Obama and his team must actively work to explain to the public the urgent need for action and the availability of myriad affordable solutions (see here). But I think Boxer's strategy may be worth considering. Here are more details:

Former Washington Gov. Locke would bring a strong voice for oceans to Commerce

If President Barack Obama's third choice for Commerce Secretary sticks, we will have a knowledgeable voice as the secretary who oversees much of the nation's oceans management, including fisheries.

Coming from a coastal state, former Washington Governor Gary Locke should appreciate the importance of our oceans to the people of the United States and the health of our nation's economy.

The ideological tensions inside the IPCC gives its reports alarming credibility

Over on DotEarth, Andy Revkin has an interesting post about the "burning embers" diagram from the latest IPCC. The upshot of the story is that several countries well-known for their desire to do nothing about climate change were able to remove an alarming figure from the 2007 report:

The diagram, known as "burning embers," is an updated version of one that was a central feature of the panel's preceding climate report in 2001. The main opposition to including the diagram in 2007, they say, came from officials representing the United States, China, Russia and Saudi Arabia.

People who argue that the IPCC is an "alarmist" body forget that virtually all of the world's governments belong to it. Thus, governments that don't want to do anything about climate change have just as much input to the report as countries that do.

This tension between the ideological factions of the IPCC actually gives the reports credibility. Only statements that everyone agrees to make it into the report. A few countries that object to some result can keep it out of the report. This is, in fact, why the IPCC process was designed this way.

This is why some people argue that the actual science of climate change is more alarming than that revealed in the IPCC reports. In any event, if you read the IPCC reports and find it alarming, then you can have great confidence that your alarm is warranted.